Contracts

Fact pattern

In preparation for a weekend trip to New City, Tourist went on the website CloudBnB in search of an apartment to rent for a few days. Tourist was visiting New City to attend a performance of the hit musical Jefferson, which was in its last few performances in New City before going on a national tour. Tourist found a one bedroom apartment near the theater in which Jefferson would be performed listed online as available for only $150 per night. Tourist contacted Host, the owner of the apartment, through CloudBnB to ask if the apartment was available for the weekend Tourist would be in town. Host responded that the apartment was available on Tourist’s specified dates, and that she would be pleased to rent the apartment to Tourist. Host also attached an agreement for Tourist to sign and return.

The next day, Tourist received an email advertising another website called GeorgeList. GeorgeList offered short-term rentals in New City and claimed to be half the price of CloudBnB. After clicking through to the GeorgeList website, Tourist was surprised to see Host’s apartment listed on GeorgeList for only $50 per night, so long as interested parties paid in advance with a money order. On the page listing Host’s apartment, Tourist was further puzzled to see that a message stated that the apartment was undergoing renovations and would be available in six weeks, well after Tourist’s scheduled visit.

Despite what he saw on GeorgeList, Tourist was eager to lock in his residence for the weekend. Tourist printed out the agreement Host had emailed through CloudBnB. The agreement required that customers enter credit card information, but stated that the card would be charged for the reservation only after the guest’s stay was completed. The terms also included, “Should you cancel your reservation for any reason, a charge of $10 per cancelled night will be placed on your card to compensate renters for lost business and the cost of prepping their property for your stay.” Tourist signed and returned the agreement to Host.

The following week, Tourist received an email stating that the performance of Jefferson for which he had a ticket would be cancelled, due to an unexpected opportunity for the cast to perform on a national television morning show. Tourist emailed Host to say that he would not be using his reservation after all. Host replied that she was sorry Tourist would not be able to make the trip. Host also stated that she would notify CloudBnB, which would charge Tourist $20 for the two cancelled nights, as per the signed agreement.

Tourist replied, “I don’t really think that’s fair, since you claimed your apartment wasn’t available on another website! Plus, I was only coming to New City to see Jefferson, and since the performance is cancelled I don’t think it’s right to charge me for a useless place to stay.”

Host responded, “What other website are you talking about? Scammers sometimes duplicate photos of actual CloudBnB residences online. If they asked for payment in advance, it was probably someone trying to pull a fast one. I certainly didn’t list my apartment online anywhere else. And I’m sorry that you’ll miss your performance, but I don’t see what that has to do with me. As it is, I can’t afford these cancellations. I’m going to have to raise my rates to $200 per night in order to break even.” 

Tourist later saw that Host had indeed raised her rates to $200 per night. Host was able to secure another reservation, at the new rate, for the same weekend Tourist would have been in town. 

After Tourist placed a hold on his credit card, Host sued for breach of contract.

Questions

1. Did the listing on Georgelist terminate Host’s offer to rent her apartment to Tourist? Explain.
2. Did the cancellation of the performance of Jefferson affect the enforceability of the agreement between Host and Tourist? Explain.
3. Is a court likely to enforce CloudBnB’s terms charging $10 per night for cancelled reservations? Explain.