Rosemary Sherman & Anor v Reader Offers Limited

Package travel regulations do not determine when a contract is formed. That is governed by ordinary objective principles of contract formation, taking account of the parties’ dealings and their booking conditions. Where the conditions make issue of a confirmation invoice the point of contractual commitment, an earlier deposit and booking summary may reserve a place without creating a binding contract. A detailed cruise itinerary may be contractual even though minor changes are contemplated. A substantial pre-departure alteration to an essential itinerary term triggers duties to notify the consumer promptly and explain the right to cancel for a full refund or accept the altered package, with any price reduction. A force majeure defence fails where adverse conditions are beyond the organiser’s control but foreseeable in the relevant activity.

Mr and Mrs Sherman booked a cruise advertised as travelling through the Northwest Passage. Ice conditions prevented the planned itinerary, and the cruise instead spent most of its time in Greenland. The County Court dismissed their claims. On appeal, Mrs Justice Collins Rice held that Reader Offers Limited was in breach of contract and of the package travel regulations, and remitted the case for determination of remedies: [2023] EWHC 524 (KB). Reader Offers appealed. The central issues were when the contract was formed, whether the detailed itinerary was contractual, whether the pre-departure changes were major or significant, and whether the unforeseeability defence applied.

1. Disposition and formation. The appeal was dismissed and the case was remitted to the County Court solely for assessment of quantum. The Package Travel, Package Holidays and Package Tours Regulations 1992 formed part of the background to the contract but did not determine when it was made. The question was governed by ordinary objective principles, considering the parties’ dealings as a whole. Lord Justice Males applied the approach explained in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at p 611 and Global Asset Capital Inc v Aabar Block Sarl [2017] EWCA Civ 37. The booking conditions made issue of the confirmation invoice the point of contractual commitment. No contract was formed on 9 or 10 January; the contract was concluded when the confirmation, invoice and detailed itinerary were sent on 22 January, after a reasonable opportunity to consider them.
2. Contractual itinerary. The detailed itinerary formed part of the contract and was not merely aspirational. Clause 7.3.1 contemplated minor changes, but established the confirmed itinerary as the baseline for assessing whether later changes were major. The possibility of weather, wind and ice affecting the itinerary did not mean that the substance of the proposed cruise could disappear.
3. Pre-departure change. The change from the detailed itinerary to the revised plan, under which about half of the Northwest Passage stage would no longer take place, was a major change under the booking conditions and a significant alteration of an essential term under regulation 12. Reader Offers had to notify passengers promptly, explain the revised itinerary, and inform them of their right to cancel for a full refund or accept the altered arrangements, including any price reduction. It failed to do so and was in breach of clause 7 and regulation 12. The regulations were to be interpreted in accordance with their consumer-protection purpose, applying the approach in X v Kuoni Travel Ltd [2021] UKSC 34, [2021] 1 WLR 3910.
4. Failure after departure and force majeure. A significant proportion of the contracted services was not provided, engaging regulation 14. Although the ice was beyond Reader Offers’ control and unusual for the time of year, it was foreseeable that the Northwest Passage might be impassable. The cumulative force majeure requirements were therefore not satisfied, and regulation 15 did not exclude liability.
5. Remission. The County Court was not to reopen dismissed claims or factual findings. If the Shermans would have cancelled on receiving the required information, they could recover the price paid, modest disappointment compensation and appropriate credit for return travel costs. If they would have proceeded, compensation was to reflect the difference between the price paid and the value of the services supplied. Lord Justice Underhill added that, in an exceptional expedition whose itinerary was inherently uncertain, a clear and prominent conditional warning might affect the operation of regulations 9, 12 and 14; that observation was not necessary to the decision.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 412, the court dismissed Reader Offers Limited’s appeal and remitted the matter solely for assessment of quantum.
2. High Court of Justice, King’s Bench Division: Mrs Justice Collins Rice allowed the appeal from the County Court, held that Reader Offers was in breach of contract and the package travel regulations, and remitted the case for determination of remedies: [2023] EWHC 524 (KB).
3. County Court: After a seven-day trial, Mr Recorder Bowes QC dismissed the claims and ordered the claimants to pay the costs.