Tuesday, December 6, 2011

Lavine v. American Airlines, Inc. (Ct. of Special Appeals)

Filed: December 1, 2011

Opinion by Judge James Kenney III

Held: A "no oral modification" clause of a contract can preclude oral modifications where it constrains the authority of agents to act without written authorization from a corporate officer.

Facts: This case arises from a contract dispute between an airline and two airline passengers. Passengers booked airline tickets online and received an "E-Ticket Confirmation" email which included a link "Conditions of Carriage" providing the terms and conditions of the contract. The "Conditions of Carriage" stated in part, "[n]o agent, employee or representative of American has authority to alter, modify or waive any provision of the Conditions of Carriage unless authorized in writing by a corporate officer of American."

Due to a delay in the passengers outbound flight, an employee of the airline represented to passengers that a connecting flight would be provided. The outbound flight did not arrive at the connecting destination in time to board the connecting flight. The passengers were not provided a substitute connecting flight until the following day. The passengers contend that the airline employee's representation orally modified the terms of the contract.

Analysis: Even if an employee's representations amount to what would generally be an oral modification to a contract, the modification would not have been valid because of the specific language in the non-modification clause. The Court did not address whether or not the employee's representation otherwise would amount to an oral modification. The Court only addressed whether the employee had authority to make a modification.

[ed. Compare this result with the one in Hovnanian Land v. Annapolis Towne Ctr., 415 MD. 337, 1 A.3d 467 (2010), where the Court of Appeals held that a condition precedent may be waived by a party's conduct despite a non-waiver clause which required any waiver to be in writing.]

In Lavine, the Court held a non-modification clause of a contract which provides that no agent, employee or representative of the party has authority to alter, modify or waive any provision of the contract unless in writing by an officer of the party will withstand challenges that a contract has been orally modified, so long as the agent, employee or representative that made the oral modification did not have written authorization.

The full opinion is available in pdf.