Cruise Ship Passenger Contracts: The Trip of a Lifetime, or a Voyage through Clauses, Conventions and Confusion?

• Author: Rosemary Gibson
• Position: BA, LLB (Hons.), LLM. PhD candidate and lecturer, University of Queensland. Before working at the University of Queensland, Rosemary was in private practice for a number of years, specialising in maritime and shipping law
• Pages: 17-35

(2018) 32 A&NZ Mar LJ 17

CRUISE SHIP PASSENGER CONTRACTS: THE TRIP OF A LIFETIME OR A

VOYAGE THROUGH CLAUSES, CONVENTIONS AND CONFUSION?

Rosemary Gibson*

1 Introduction

Cruising is a global, multi -billion dollar industry.1 The major corporate players boast fleets of multiple luxury

vessels, accommodate thousands if not millions of p assengers every year,2 offer holidays and cruises across

multiple continents, are listed on stock exchanges, and are answerable to their shareholders. Underneath all of this

are the many thousands of contracts with individual passengers governing the legal conditions under which those

passengers travel. These contracts are invariably standard form contracts offered by the cruise line to the passenger

on a ‘take it or leave it’ basis. Although the standard contract terms of cruise passa ge contracts tend to address

identical legal issues (such as the parties to the contract, cancellations and deviations, and exclusions and

limitations of liability), the content of these contracts varies widely. Some co ntracts offer generous or at least

objectively reasonable terms and conditions to passengers, while others exclude and limit the carrier’s liability in

almost all circumstances and attempt to extend those limitations to a long list of third parties. This paper analyses

the standard terms and conditions of five of the major cruise operators 3 with a view to ascertaining the

commonality between the terms offered, the reasonableness or otherwise of these terms, and the differences

between these standard conditions and the relevant international liability conventions. In addition to the express

standard conditions, a passenger may also be subject to additional terms incorporated into the contract at common

law, or to one or more international liability regimes, commonly the Athens Convention relating to the Carriage

of Passengers and their Luggage at Sea 1974, as amended by the 1976 Protocol (Athens 1974), or the amended

Athens Convention 2002 (Athens 2002). The contractual position of many passengers is t hus a confusing web of

competing contract clauses, common law rules, and international conventions. Suffice to say that a passenger who

books a cruise may understandably have little or no idea as to what the terms of the cruise actually are, or even

with whom contract is made. This situation would be much simplified if more countries, including Australia,

signed up to Athens 2002, as this would provide greater certainty for passengers, cruise lines and the industry

generally.

The following section 2 of this paper discusses basic contract formation issues, namely, the common law approach

for determining when and where a cruise contract is made, the impact of electronic transactions on this issue, and

express p rovisions on contract formation. Sectio n 3 considers the documents that may c omprise the contract,

including tickets, brochures, emails and itineraries. Again, common express contract provisions on this issue will

be considered. Section 4 briefly con siders the parties to the contract. Section 5 then analyses the typical co ntract

terms found in the standard carriage conditions of five of the major cruise operators, including exclusion clauses,

limitation of liability clauses, time limitation clauses, and applicable law and jurisdiction clauses. The

corresponding provisions of Athens 1974 and Athens 2002 will be considered throughout.

* BA, LLB (Hons.), LLM. PhD candidate and lecturer, University of Queensland. Before working at the University of Queensland,

Rosemary was in private practice for a number of years, specialising in maritime and shipping law.

This paper was originally presented at the Global Shipping Law Forum in Brisbane on 4 July 2018. Other papers were presented at this

Forum on other cruise-related topics, including the origin and provisions of the Athens Conventions, the implementation of Athens in the

EU, and issues specifically affecting cruise ship passengers under Australian law. To avoid repeating matters addressed in detail in those

papers, references will simply be made to those papers where relevant. Thank you to the anonymous referees for their helpful suggestions

and comments on the draft paper.

1 The 2017 Annual Report for Royal Caribbean Cruises Ltd boasted net income of $1.6 billion for the year ended December 31 2016:

http://www.rclcorporate.com/content/uploads/2017-Form-10-K-RCL-ir.pdf (accessed 28 June 2018). The 2017 Annual Report for Carnival

Corporation reported revenues of $17.5 billion:

file:///D:/Cruise%20article/Carnival%20Corporation%20&%20plc%202017%20Annual%20Report%20(FINAL).pdf (accessed 28 June

2018).

2 The 2017 Annual Report for Royal Caribbean Cruises Ltd reported the cruise line had carried over 5 million passengers every year since

2014: http://www.rclcorporate.com/content/uploads/2017-Form-10-K-RCL-ir.pdf (accessed 28 June 2018). The 2017 Annual Report for

Carnival reported it had carried over 12 million passengers that year alone:

file:///D:/Cruise%20article/Carnival%20Corporation%20&%20plc%202017%20Annual%20Report%20(FINAL).pdf (accessed 28 June

2018).

3 Carnival Plc (which trades under the names of P&O, Carnival, Princess Cruises and Cunard), Royal Caribbean Cruises Ltd (which owns

and operates Royal Caribbean International, Celebrity Cruises and Azamara Cruises), Norwegian Cruise Line Holdings Ltd (which operates

Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises), Silversea Cruises, and Ponant.

Cruise Ship Passenger Contracts: The Trip of a Lifetime or a Voyage through Clauses,

Conventions and Confusion?

(2018) 32 A&NZ Mar LJ 18

2 Formation of the Contract: Where and When the Contract is Made

Many disputes concerning cruise passenger co ntracts involve basic contract law issues of offer and acceptance

and incorporation of terms. In order for a contract to come into existence, th e common law requires agreement,

which has traditionally been said to comprise offer and acceptance, although some commentators have suggested

it may be more appropriate to see the negotiation process as a co ntinuum of commitment, weak at the begi nning

and stronger as the negotiations progress.4 In the context of passenger contracts, it is crucial to identify when and

where the contract was formed for several reasons. First, Athens 1974/2002 will apply if the contract of carriage

has been made in a state party to the Convention, or provides that the place of departure or destination is in a state

party.5 Second, the place of acceptance may impact on conflict of law issues, including the proper la w of the

contract, as well as jurisdictio nal issues, such as the appro priate forum for the d ispute to be heard. Third, and

crucially, once an agreement has been formed, the parties cannot attempt to incorporate later terms into the

contract. A large number of the reported cases concerning cruise ship passenger contracts are concerned with the

time of contract formation and the enforceability of a term introduced after that time. T he following section will

examine the way in which these fundamental contract law principles apply to cruise contracts, how they have

evolved, and the impact of modern technology.6

2.1 The ‘Conventional Analysis’ in Ticket Cases

Since the 1800s, sea carriers, rail way companies and cloakroom operators have routinely printed ter ms and

conditions of service onto tickets issued to customers. The early English ticket cases applied what has become

known as the ‘conventional analysis’ to contract formation. The ticket and its terms were said to constitute an

offer by the service provider to the customer, who then had the opportunity to consider the terms. If the customer

retained the ticket and did not object to the terms, the customer was taken to have accepted the offer.7 The service

provider could not then rely on additional terms that were onl y b rought to the customer’s attention after the

contract was formed. In the case of automated ticket machines, the situation was slightly different: the o ffer was

made when the proprietor held out the machine as being ready to receive money and the acce ptance took place

when the customer put the money into the slot, even though the ticket was i ssued later.8

The same reasoning was applied to cruise passenger contracts. It was accepted that the contract was formed when

the money was paid and the ticket issued.9 Indeed, in Cockerton v Naviera Aznar SA,10 the court found that despite

the plaintiffs reserving a place on the vessel, receiving a letter confirming the booking, and p osting a cheque, the

contract of carriage was not formed until the ticket was issued later because none of the contacting parties would

have expected a contract to have co me into existence until the ticket was received.11 Consequently, the plaintiffs

were bound by the exemption clause endorsed on the printed ticket.

2.2 The Current Common Law Approach to Formation of Cruise Contracts

It is now accepted that a passage contract may come into existe nce before a ticket is used. In Hollingworth v

Southern Fer ries (The Eagle),12 the Court declined to follow Cockerton and instead held that the ordinary rules

of contract should apply to ticket cases. In that case, the plaintiff’s agent booked the cruise over the telephone and

paid a deposit. He later paid the balance and collected the tickets. The contract was made and ‘perfected’ before

the ticket was issued, and the defendants could not ‘rely upon the exclusion clause on the basis that the ticket was

a contractual document’. 13 However, the Judge did not explain why the contract was not formed on issuance or

receipt of the tickets, or identify when precisely the contract was formed, although presumabl y it was when the

booking was made and the deposit was paid.

4 N C Seddon, R A Bigwood, with M P Ellinghaus (eds), Cheshire & Fifoot Law of Contract (10th ed, 2012) 94.

5 Art 2.

6 A comprehensive consideration of formation of contract issues in the context of cruise passenger contracts can be found in Kate Lewins,

International Ca rriage of Passenger s by Sea (Sweet & Maxwell, 2016).

7 Thornton v Shoe Lane Par king [1971] 2 QB 163, 169 (Denning L); Hood v Anchor Line [1918] AC 837, 843 (Finlay L); Parker v South

Eastern Railway Co (1877) 2 CPD 416; Harris v Grea t Western Railway Co (1876) 1 QBD 515.

8 Thornton v Shoe Lane Par king [1971] 2 QB 163, 170 (Denning L).

9 For example, Hood v Anchor Line [1918] AC 837, it was accepted that the contract was formed when the money was paid and the ticket

issued. The real issue was whether or not the passenger was bound by the limitation of liability clause printed on the ticket.

10 [1960] 2 Lloyd’s Rep 450.

11 Ibid, 460 (Streatfeild J).

12 [1977] 2 Lloyd’s Rep 70.

13 [1977] 2 Lloyd’s Rep 70, 75 (Judge Ogden).