Balancing fairness and justice: airlines' cancellation policy creates turbulence

I had booked my air plane ticket with American Airlines (AA) a few months ago to fly back to Colorado in October, but in the interim accepted a job and needed to fly earlier. I called AA today to see if I could cancel, rebook, acquire credit, etc.

AA informed me they wouldn't refund, nor rebook my ticket without me paying the minimum $200 service fee. They further said either the named passenger could fly or the seat would be empty. The AA agent said, any change - refund, name change, rebooking - would carry a $200 service fee. The AA agent, upon seeing that my ticket was $141 said that I was ahead to cancel, take the loss and purchase a brand new ticket when I was ready to fly. I opted to rescind the reservation. I presume the $141 I had paid in-advance would be regarded as pure economic loss.

I understand the contract analysis that the bargain for exchange was $141 in exchange for non-refundable reservation/ticket. If I had contracted for a refundable ticket, that would have been $1,056.

Playing out the fact pattern a bit more, let's say that AA sells the seat I cancelled to another. That means AA not only gets my $141, but also gets to profit from making another sale. Even if AA doesn't resell my cancelled seat, they still have a greater bargain than they contracted for, as without me riding the plane, they would have better fuel efficiency because the plane would be lighter, from less body and cargo weight.

Perhaps it is that I am poor and $141 is a lot of money to me, but it seems unfair. I thought about unjustified enrichment as a possible legal basis for action, but such an action is only to prevent a breaching party from receiving the benefit. Since I am breaching party, I wouldn't have a right to claim AA is unjustly enriched.

On the regulatory side, the Department of Transportation has determined that notice of terms concerning refunds and monetary penalties is sufficiently important to be given directly to passengers. The regulations say, "A passenger shall not be bound by any terms restricting refunds of the ticket price, imposing monetary penalties on passengers, or permitting the carrier to raise the price, unless the passenger receives conspicuous written notice of the salient features of those terms on or with the ticket." 14 C.F.R. § 253.7.

Not that a non-refundable ticket bounds AA to not granting refunds, it is just that to award a refund of the ticket price carries a $200 service fee. Perhaps the software licence or call center's staff are expensive, but $200 seems a bit hefty for a service fee. Makes me wonder at what point does a fee become a monetary penalty? Conversely, it seems keeping the ticket price is a constructive monetary penalty. Also, the service fee is a constructive form of restricting refunds, as who would pay $200 to get a $141 ticket refund?

Roman law principles being used in modern case law

I have been writing a paper on how Roman law is still incorporated into the case law of Great Britain, if an issue at first instant has no precedent or statute on which to stand. It is rare that it does happen, but once and a while and issue will arise which hasn't been legislated on or made law through the courts (I was shocked to discover that in the hundreds of thousands of laws, this could happen).

The case which we were assigned to study was the Sloans Dairy Case, which concerns the principle of periculum rei venditae nondum traditae est emptoris and whether or not it applies to the sale of heritable (real estate) property. The case essentially boils down to a question of when the contract became valid. As Sloans Dairy had sold, but not physically received payment for some property with developments to the Glasgow Corp. Part of the developments burned after the missives were notarized. The defendants refused full payment, claiming the valued had diminished due to the damage caused by the fire. The pursuers raised an action for a decree ordaining the defenders to make good the negotiated sale price and cough up the cash. The question for the court was when does 'risk' transfer from the seller to the buyer? According to Roman law, risk transfers when the contract is made perfect.

The question then must be asked, what are the essentials which make the contract perfect? Roman law and that of Scotland state that subject matter, price, and agreement on the essential terms. As luck would have a date was not mentioned in the contract, correspondence between the parties and thus no clear cut line could be drawn for when the contract was perfect. Roman law states that when the price and subject matter is agreed the contract is perfect. Britain has tended to accept this logic, though this means risk can transfer ahead of possession. This was the position held by the Court of Session in Sloans Dairy and the defenders were ordered to pay the purchase price (which had been agreed). While I agree with the logic, it seems a date should be considered an essential element of a contract required to be in writing.

It is amazing how much risk a buyer assumes when concluding a contract prior to the delivery of the possession. I love the quote from one judge who said the buyer accepts the risk and reaps the benefits of consequences. Another analogy which I liked was what if you commission a painting for $10,000 and you arrange to have the painting shipped to you, but in transit the artist dies, causing the value to appreciate to $20,000. The point being risk isn't always a negative.