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Key information

High Court of Australia

Incorporation of terms

AustraliaOceanic Sun Line Special Shipping Co Inc v Fay

(1988) 165 CLR 197, High Court of Australia


Fay booked a cruise of the Greek Islands on a ship owned by Oceanic.  Before paying he was shown a brochure which said the transportation of passengers was governed by terms and conditions printed on the ticket which could be inspected at a Sun Line office.  Fay did not read this part of the brochure and the travel agent did not have any tickets he could inspect.  The agent provided Fay with an exchange order which he could use to obtain a ticket in Athens.  Clause 13 of the ticket provided that any action against Oceanic must be brought in Athens and the jurisdiction of other courts was excluded.  Fay sustained an injury during the voyage and claimed negligence against Oceanic in the NSW Supreme Court (NSW is where he had purchased the ticket).  The application was refused at first instance and on appeal to the Court of Appeal – a further appeal was made. 

Held (Brennan J: other members of Court agreeing on this point)

The ticket was provided to Fay after the original contract was made.  It could not alter existing terms.  ‘A condition printed on a ticket is ineffective to alter a contract of carriage if the ticket is issued after the contract is made.’

‘If a passenger signs and thereby binds himself to the terms of a contract of carriage containing a clause exempting the carrier from liability for loss arising out of the carriage, it is immaterial that the passenger did not trouble to discover the contents of the contract. But 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 … In differing circumstances, different steps may be needed to bring an exemption clause to a passenger's notice, especially if the clause is an unusual one. In the present case, the only step which the defendant took … before the fare was paid was the note in the brochure that the conditions of carriage were printed in the (unavailable) Passenger Ticket Contract. …

That was held to be insufficient.  Dr Fay was unaware of the clause and it was not incorporated into the contract with Oceanic.  Oceanic could not subsequently issue a ticket effectively adding the clause.