When flights go ahead, but you are not able to take them - frustrated contracts

Streaky_Bacon

There is a very common situation on this board, where people have bought flights which go ahead, but which they are prevented from traveling on.

It seems that the stock advice that is given is that if the flight goes, the supplier has executed their part of the contract and it makes no difference that the passenger cannot travel due to coronavirus restrictions.

This advice is based on a reasonably simple understanding of contract law, and does not take into account concepts, including "frustration".

I would like to suggest that people posting here may wish to read further on the issue of frustration of contract and where it may apply to refund, rather than just assuming that the airline (or other travel provider) has completed their part of a valid contract and the customer remains liable for payment.

The following article on gov.uk may be helpful in this instance.

https://www.gov.uk/government/publications/cma-to-investigate-concerns-about-cancellation-policies-during-the-coronavirus-covid-19-pandemic/the-coronavirus-covid-19-pandemic-consumer-contracts-cancellation-and-refunds#contracts-that-cannot-go-ahead-due-to-lockdown-laws

In some circumstances, due to lockdown laws, a contract cannot go ahead as agreed or at all, and is therefore ‘frustrated’. A contract will be frustrated as a matter of law if, due to no fault of the parties, something happens after the contract was entered into which means it can no longer be performed at all or performance would be radically different to what was agreed.

As a result, the contract comes to an end and, where consumers have paid money in advance for services or goods that they have yet to receive, they will generally be entitled to obtain a refund.

They will also not be required to make further payments.

In particular, for most consumer contracts, the CMA would expect a consumer to be offered a full refund where:

• a consumer is prevented from receiving any goods or services, because, for example, lockdown laws in the UK or abroad have made it illegal to receive or use the goods or services

unforeseen

https://www.pinsentmasons.com/out-law/guides/english-contracts-frustration-coronavirus#:~:text=What is frustration?,or illegal to perform; or

CKhalvashi

An airline offering a seat on a specific flight, with a large number of conditions, including the fact that it is the responsibility of the individual, not the airline, to meet the immigration requirements means the above is completely incorrect, goes against long standing principal, and has not been tested in court.

Please don't hold out false hope that anything else may be the case, as it very likely won't be.

eskbanker

The CMA guidance that OP links is their generic article from earlier in the year, but they have recently initiated an investigation specifically into the stance of the airlines - https://www.gov.uk/government/news/covid-19-cma-launches-investigation-into-airlines-over-refunds suggests that they feel there is a case to answer, but obviously the investigation needs to take its course.

The investigation will consider situations where airlines continued to operate flights despite people being unable lawfully to travel for non-essential purposes in the UK or abroad, for example during the second lockdown in England in November.

The CMA is aware that, in some cases where flights were not cancelled, customers were not offered refunds even though they could not lawfully travel. Instead, many were offered the option to rebook or to receive a voucher.

The CMA recognises that the airlines sector, like many others, is under strain due to the pandemic. However, it is concerned that certain airlines may have breached consumers’ legal rights by failing to offer cash refunds, leaving people unfairly out of pocket, and has therefore opened an investigation to examine the matter further.

but also:

1. It should not be assumed at this stage of the CMA’s investigation that any airline has breached consumers’ rights. The CMA has not reached a view on this issue and, ultimately, only a court can decide whether this has occurred.

[Deleted User]

I was under the impression that “frustrated” contact could only be applied if unforeseen circumstances occurred after contract was entered into?   Anyone who booked post March 2020 would not fall into this category.   

As the CMA are looking into it, all you can suggest now is people wait for the outcome unless they want to take it to court themselves, which in my view is pointless.   

Streaky_Bacon

There is plenty of case law regarding frustration which people may wish to acquaint themselves.

It is clear from what the CMA say that they believe that flights which still go ahead may involve frustrated contracts (thanks to @eskbanker for the more recent content).

Despite the existing frustration case law, it is true that this has not yet been tested in court with regards to flights and coronavirus. It is, however, always the case that there can be no guarantee what a court would decide in any given case.

Parties to a claim would typically put forward all arguments which they feel the court may agree with, with no guarantee of the actual decision. Those same arguments would also typically be put forward at the initial complaint stage.

The problem as I see it at the moment, is that people on this forum are being advised that there are absolutely no arguable grounds for a refund if the flight goes ahead, but they legally cannot board it.

I feel that we should not be advising people that there are absolutely no arguable grounds, when the CMA clearly disagrees.

There is no reason that people should not routinely be advised that frustration may be a ground for a refund, and that they should put that argument to the supplier, although it is also correct that we should point out that it is currently untested in court.

CKhalvashi

Streaky_Bacon said:

There is plenty of case law regarding frustration which people may wish to acquaint themselves.

It is clear from what the CMA say that they believe that flights which still go ahead may involve frustrated contracts (thanks to @eskbanker for the more recent content).

Despite the existing frustration case law, it is true that this has not yet been tested in court with regards to flights and coronavirus. It is, however, always the case that there can be no guarantee what a court would decide in any given case.

Parties to a claim would typically put forward all arguments which they feel the court may agree with, with no guarantee of the actual decision. Those same arguments would also typically be put forward at the initial complaint stage.

The problem as I see it at the moment, is that people on this forum are being advised that there are absolutely no arguable grounds for a refund if the flight goes ahead, but they legally cannot board it.

I feel that we should not be advising people that there are absolutely no arguable grounds, when the CMA clearly disagrees.

There is no reason that people should not routinely be advised that frustration may be a ground for a refund, and that they should put that argument to the supplier, although it is also correct that we should point out that it is currently untested in court.

No, the CMA are looking into it, and have made no assumption that any airline has acted in an improper manner. This is completely different from them completely disagreeing.

I am not stating that it's impossible to take the matter to court, I could take you to court if I wished, however I have no reason to that would justify any judgement to be awarded against you.

Once there is adequate case law on the situation (as I've said, I've not encouraged anyone not to use legal remedies available to them), this may be clearer one way or another. This does not exist.

It will become much more difficult to use a UK opinion that strictly speaking isn't legally binding against a foreign airline from 1 January, as court judgements will not be automatically enforceable overseas. This will include most flights operated by 2 of the 3 largest low cost carriers in the EU, and a significant portion of UK-touching flights from the third. This needs to be taken into account also.

You are writing as though you are sure the airlines are in the wrong, which at this time is not the case, and nobody with the exception of yourself deems this to be the case. I would expect airlines if they have not already done so to re-word their contracts to avoid this very quickly.

There is therefore no reason to change the advice given until we find the final results of the ongoing investigation, which will leave consumers 6 years from the date of their flight to claim from the airline. I will, however, call you out (politely of course) on your postings of this nature, as very likely there will be no recourse for any flight booked after approximately March 15, and possibly going back into February.

Streaky_Bacon

I think that there is a risk of misreading the comments from the CMA.

It is clear from their comments that they believe that the principle of frustration of contracts may well apply to the issue of flights that go ahead. It is implausible that they have got to the stage of issuing these comments without taking significant legal advice on the matter.

Of course, they have an obligation to carry out an investigation, as to whether individual airlines have actually breached consumer rights, and there will be various issues to consider.

It is right that they do not assume that an airline is guilty of breaching those rights until a proper investigation has been conducted.

That is not the same things as them stating that they do not currently believe that frustration is an arguable ground. If they didn't think it was then there wouldn't be an investigation at all.

Posters should not be told that there is absolutely no arguable ground for a refund. They should be told that frustration may be an arguable ground and advised to put that to the supplier.

If the lawyers at the CMA believe that frustration may be an arguable ground and that "certain airlines may have breached consumers’ legal rights by failing to offer cash refunds", why would we be advising posters that there is absolutely no arguable ground for a refund?

[Deleted User]

Streaky_Bacon said:

I feel that we should not be advising people that there are absolutely no arguable grounds, when the CMA clearly disagrees.

There is no reason that people should not routinely be advised that frustration may be a ground for a refund, and that they should put that argument to the supplier, 

But that is exactly how it is at this moment in time.  There are no grounds for a refund until/unless there is a successful appeal in court.  People can argue all they want but it is probably better for the stress levels if they wait.  The CMA have only newly decided to take this up so previous advice was correct.  

Streaky_Bacon

Tedber said:

But that is exactly how it is at this moment in time.  There are no grounds for a refund until/unless there is a successful appeal in court.  People can argue all they want but it is probably better for the stress levels if they wait.  The CMA have only newly decided to take this up so previous advice was correct.  

That is not an accurate reflection of the situation.

Frustration of contract is a well established principle under English law, and it is clear that the CMA believe that it may apply in the case of flights that go ahead.

There can never be any absolutes under the law, there are only arguments that you can realistically put forward.

There does not need to be an "appeal in court" before that ground can, or should, be argued.

Once somebody has brought a case and it has been heard in a higher court then there would be precedent in the current situation, but there is already precedent for frustration of contract, and if nobody ever put the argument forward, it would never be tested in court.

It is wrong to say that there is no arguable ground (which is what people are commonly told now), it is accurate to say that there is an arguable ground and that the CMA believe that the courts may enforce it, but that it has not yet been tested in court on the current facts.

Putting forward your arguments to the other party is not the same as just "arguing" it is the basic process for all complaints/claims.

Thrugelmir

Streaky_Bacon said:

Tedber said:

But that is exactly how it is at this moment in time.  There are no grounds for a refund until/unless there is a successful appeal in court.  People can argue all they want but it is probably better for the stress levels if they wait.  The CMA have only newly decided to take this up so previous advice was correct.  

Frustration of contract is a well established principle under English law, and it is clear that the CMA believe that it may apply in the case of flights that go ahead.

How is the CMA going to determine the case of each individual flight. Airlines cannot reroute their services at short notice in the same way that an individual can find their travel plans disrupted.