Oceanic Sun Line Special Shipping Company Inc v Fay

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Citation: (1988) 165 CLR 197 This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 362-4


Background facts

  • Plaintiff (Fay) booked a cruise in Greece from the Defendant (Oceanic Sun Line).
  • Upon paying the fare, Plaintiff was given an ‘exchange order’ which stated that it would be exchanged for a ticket upon boarding the cruise ship.
  • When the Plaintiff arrived at Athens for the cruise, he was handed a ticket containing a condition that Greek courts would have exclusive jurisdiction in any action against the owner.
  • Defendant was injured, and sued in NSW.

Legal issues

  • Incorporation of terms - incorporation of terms by notice, timing
    • When was the contract made?
    • If made in Australia, was it a already a contract of carriage or contract to later provide an offer for a contract of carriage in Greece?
    • Was the exclusive jurisdiction clause incorporated into the contract of carriage?
    • Did the Defendant do all that was reasonably necessary to notify the Plaintiff of the exemption clause?


When was the contract made?

  • The Defendant claims there was no contract in Sydney because it reserved the right to cancel cruises. This right gives them discretion as to consideration, making their promise illusory. The Defendant also insists that the exemption clause is similar to the one in MacRobertson Miller Airline Services v Commissioner of State Taxation (WA).
  • However, in MacRobertson the court regarded the exemption clause as showing that the carrier "undertakes no executory obligation which creates rights in an obligee.[1]
  • This does not apply here - the Defendant does incur contractual obligations through the exchange order.
    • "the exemption endorsed in the exchange order is not so wide as to preclude the existence of any contractual obligation on the part of the Defendant when the exchange was issued. To the contrary, the exchange order contains promises to refund the fare if the cruise is cancelled and to exchange the exchange order for a 'Sun Line ticket when boarding the vessel' if the cruise is to proceed.[2]"
  • The exchange order also specified contractual rights of the Defendant (such as refusing refunds in case of a passenger cancellation)...if no contract was made through the exchange order, the Defendant could not rely on this right.
  • Therefore, these contractual rights and obligations indicate that a contract was entered into already in Australia, through the exchange order.

Was the contract made in Sydney already a contract of carriage

  • It hardly seems possible that the Plaintiff, upon paying a fair in Australia, only expected to be provided with a mere offer (and not already a formed contract) of carriage upon reaching Greece, even less so an offer which contains exemption clauses of which he was not previously aware of when paying his fair.
    • "The arrangements contemplated at the time of the issue of the exchange order for exchanging that document for a ticket cannot reasonably support the hypothesis that when issued the ticket might be a mere offer containing exemption clauses which should bind the plaintiff only upon subsequent acceptance.[3]"
    • "Apart from the insufficiency of opportunity for the passenger who is boarding a vessel to read the conditions printed on the ticket and to elect whether to accept them, the election could be made only after travelling to Greece and obtaining the ticket, and the terms of the exchange order would require a passenger who then elected to decline the offer to forfeit the fare already paid.[4]"
  • Rather, the Plaintiff purchased an option to initiate an already made contract of carriage, based on the terms he agreed to when buying the exchange order.
    • "The better analysis of the transaction is that the defendant was bound to issue a ticket in exchange for the exchange order in performance of a contract of carriage already made, but the defendant was given no right to introduce new conditions of carriage by printing them on the ticket. The payment of the fare may rightly be regarded as the price of an option to acquire a ticket, but the option was not to acquire a mere piece of paper. It was an option to acquire a voucher or certificate of entitlement to be carried on terms already agreed — not on terms which the parties had yet to agree on.[5]

Was the exclusive jurisdiction clause incorporated into the contract of carriage

  • No, the attempt to incorporate the exclusive jurisdiction clause came after the contract of carriage was made.
  • "A condition printed on a ticket is ineffective to alter a contract of carriage if the ticket is issued after the contract is made.[6]"
  • Therefore, the clause cannot be incorporated.

Reasonably necessary steps to notify

  • In the case of a ticket (rather than a signed document), an exemption clause (from liability of loss) will only be deemed incorporated if the Offeror took all reasonable steps to notify the Offeree of the clause.
    • "...where an exemption clause is contained in a ticket or other document intended by the carrier to contain the terms of carriage, yet the other party is not in fact aware when the contract is made that an exemption clause is intended to be a term of the contract, the carrier cannot rely on that clause unless, at the time of the contract, the carrier had done all that was reasonably necessary to bring the exemption clause to the passenger's notice.[7]"


  1. (1975) 133 CLR 125, 148"
  2. (1988) 165 CLR 197, 226
  3. (1988) 165 CLR 197, 228
  4. (1988) 165 CLR 197, 228
  5. (1988) 165 CLR 197, 228
  6. (1988) 165 CLR 197, 228, relying on Daly v General Steam Navigation Co Ltd (The 'Dragon') [1979] 1 Lloyd's Rep 257, 262
  7. (1988) 165 CLR 197, 228-9
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