Abta contracts with travel agent's customer

Bowerman and another v Association of British Travel Agents Ltd; Court of Appeal (Lord Justice Hirst, Lord Justice Waite and Lord Justice Hobhouse); 21 November 1995

The notice displayed by tour operators who were members of Abta describing Abta's scheme of protection against the financial failure of its members would be understood by the ordinary member of the public as importing an intention by Abta to create legal relations with customers of Abta members.

The Court of Appeal (Lord Justice Hirst dissenting) allowed an appeal by the plaintiffs, Emma Bowerman and Stephen Wallace, from Mr Justice Mitchell's decision that the defendant, Abta, was not liable to reimburse the plaintiffs the costs of insurance cover paid for a lost holiday.

The first plaintiff, a school girl, and the second plaintiff, a teacher, were booked on a school skiing holiday with a tour operator who was an Abta member. Abta, a trade association of travel agents and tour operators, promoted its members by publishing how it protected the public from the risk of the agent's or operator's insolvency. The Abta notice displayed in the operator's office describing Abta's scheme of protection against the financial failure of its members, included words such as "Abta seeks to arrange for you to continue with the booked arrangement as far as possible and ensures that if you are abroad you will be able to return to the United Kingdom."

The operator became insolvent but the skiing holiday was arranged with another operator who received the Abta refund. However Abta's reimbursement did not include the holiday insurance premium paid by each party on the tour. The plaintiffs claimed from Abta a refund of the sum attributable to the insurance.

The judge decided that the Abta notice displayed at the tour operator could not be construed as a contractual offer to all customers of failed Abta tour operators to protect them financially and dismissed the plaintiffs' claim.

Edward Bailey (Mason Bond, Leeds) for the plaintiffs; Catharine Otton- Goulder (Bignalls) for Abta.

Lord Justice Hirst, dissenting and dismissing the appeal, said that the notice was descriptive rather than contractual in character.

Lord Justice Waite, allowing the appeal, said that a reader of the notice would be aware of the vulnerability of agents and operators in a highly competitive market where failures were not uncommon. The reader would know that those who wished to disclaim legal liability for public representations frequently said so.

The most striking feature of the notice was its remarkable variety of tone and language. In the end the case depended on impression. The notice, notwithstanding the bewildering miscellany it contained of information, promise, disclaimer and reassurance, would be understood by the ordinary member of the public as importing an intention to create legal relations with customers of Abta members.

Whenever a customer was induced to deal with one of its members by Abta's promises of protection, there was gain to the commercial purposes for which it was founded, providing clear consideration for those promises.

Lord Justice Hobhouse said that the Abta protection scheme was a scheme in relation to its members but it was a scheme of protection of the customers of Abta members. Abta was offering to protect the reader of the notice, the prospective customer. It was an inevitable inference that what Abta was saying was that it would do something for the customer if the member should fail financially.

It was a scheme whereby Abta was going to step in if the member failed and deal directly with the customer. The member of the public reading the notice would understand that Abta was undertaking to use its best endeavours, free of further expense to the customer, to procure that the customer was able to enjoy the holiday booked, or to see that the traveller abroad was brought back here. It was clearly an undertaking with a financial content.

A member of the public would understand that the notice would only apply to him if he chose to do business with an Abta member. It satisfied the criteria of a unilateral contract and contained promises which were sufficiently clear to be capable of legal enforcement.

If Abta wished to say that it was not making any promises, nothing could have been simpler than for it to have said so in the notice. For obvious commercial reasons, Abta did not choose that course.

Ying Hui Tan, Barrister