Hot Docs: Cruise line sued over itinerary changes during Egypt’s unrest

October 6, 2011

Egypt Cruise lawsuitThe mass protests in Egypt that started earlier this year led to an overthrow of the nation’s government.

Lesser known are the protests’ effects on tourism, though.

In January 2011, in response to the unrest in Egypt, the U.S. State Department issued a warning against travel to Egypt.

Naturally, most or all planned vacations to Egypt were cancelled at this point, including cruises with Egypt on their travel itinerary.

As would be expected, the cruise lines that removed Egypt from travel itineraries provided refunds or credits to their prospective passengers, except for at least one cruise line.

This lawsuit arises because of that.

Hot Doc: Gilroy v. Seabourn Cruise Line Ltd.

Source: Thomson Reuters News & Insight – National Litigation

The plaintiffs, married couple Richard and Loraine Gilroy, booked a three-week-long cruise that was to travel from Dubai, UAE to Rome, Italy.

The cruise, booked in June 2010, was to occur in March and April 2011 and included a stop in Egypt.

The whole point of the cruise, actually, was for Mrs. Gilroy to be able to visit the unique historical sites in Egypt.

After the trouble in Egypt began and many other cruise lines were cancelling their stops in Egypt, however, the Gilroys became concerned that their planned cruise through Egypt was in jeopardy.

To that end, according to the complaint, Mr. Gilroy “actively and repeatedly” inquired whether the Egyptian portion of the cruise was still on.

He was told each time by Seabourn, their cruise line, that the itinerary was unchanged.

The Gilroys were interested in cancelling as far in advance as possible because of Seabourn’s cancellation policy, which, according to the complaint, is as follows:

For guest cancellations 90 to 46 days prior to departure, the charge is 25% of the total cruise fare;  45 to 31 days prior to departure, 50%; and 30 days or less prior to departure, 100%.

When the total cruise fare is $23,900.00, even paying the 25% charge is a massive sum.

On March 13, 2011, Seabourn announced the elimination of the Egyptian portion of the cruise and that other Middle East ports would be substituted.

Unfortunately for the Gilroys, March 13 was well within 30 days of the cruise date, so when they cancelled their trip, Seabourn refused to refund any of cruise fare paid by the Gilroys (which they had paid in full in December 2010).

While the facts thus far give the Gilroys a pretty good case to recover their money under a “frustration of purpose contract” theory, this isn’t all of the facts.

While the terms of the contract allow Seabourn to keep up to 100% of a cancelling prospective passenger’s prepaid fare, Seabourn is allowed to unilaterally terminate the contract “for any reason whatsoever” without penalty.

The complaint also vaguely mentions that Seabourn may be required to refund the passenger’s fare, but even still, the contract isn’t valid.

Why?

As many of you may have already guessed, it’s an illusory contract – a contract that by its terms makes performance optional or completely discretionary for the promisor.

Basically, since the party is not truly bound by its promise, then it is not really a contract.

And that – whether all such contracts were illusory, will be the central issue should this suit proceed to trial (it doesn’t help Seabourn’s case, though, that it recently replaced the “for any reason whatsoever” language with a more standard force majeure clause in its contracts).

Regardless of how far this lawsuit gets, one still has to wonder how a textbook example of an illusory promise found its way into the contracts of a major cruise line.