What’s in the Contract?

Anyone who flies knows the drill: airlines overbook their flights.  They do this because some passengers will change plans and not take the flight.  Occasionally this practice by the airlines results in too many passengers and not enough seats.  At the gate the agent asks for volunteers, offering compensation for those willing to take a later flight.

You would do the same if you ran a business where unsold inventory could never be held for sale in a future period.

Well, it didn’t go so well this time: after the flight was boarded, the gate agents decided that they needed four seats – four employees of United needed to take this flight to be in a position to crew a flight originating elsewhere.

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Then, it all went bad.

A video posted to Facebook Sunday evening showed what is becoming another public relations nightmare for United Airlines, which is owned by United Continental Holdings.

Dr. David Dao boarded a United flight at Chicago’s O’Hare International Airport, headed to Louisville, not knowing he was about to be forced to leave a plane that was overbooked.

A nearly 30-second video clip, posted on social media by a fellow passenger, shows three security officers approaching Dao who was already seated, asking him to give up his spot on the plane. After the doctor refuses, he was eventually dragged by his arms and screaming toward the front of the plane.

It is easy to point to United as the bad guy in this situation; video, especially, has a way of burning this verdict on the mind.  Few would look to the passenger as the party at fault.

Several libertarian sites and posts have taken this path of completely ignoring the contract.  For example, Brian Doherty at Reason:

While there may be something to be said for the ability for private businesses to summon the help of the police to remove people from their premises if they refuse to leave peacefully and their presence is unwanted, there is no excuse for the police to cooperate when the reason their presence is unwanted is not “causing a disturbance” or being violent or threatening to other customers, or stealing goods or services, or doing anything wrong at all, but rather wanting to peacefully use the service they legitimately paid for.

No mention of the contract.  Sure, we can say that the airline should provide its own private police force, but we are in this world – and the issue really isn’t about the employment capacity of those who removed the passenger.  The issue is the contract.

What if the passenger “legitimately paid for” a service that included the possibility of being asked to get off of the airplane under certain circumstances?  It is always worth asking: what’s in the contract?  What if United followed the ticket contract to the letter, and it was the passenger that was in violation of his agreement with United?

Isn’t this the question?

Well, I was about to research this, but quickly found someone who did all of the heavy lifting for me.  “Did United Airlines Violate Its Own Contract By Forcing That Passenger Off The Plane?

The author, Sean Davis, went line by line through United’s Contract of Carriage, its official contract with ticketed passengers.  To make a long story short, it seems United did not follow procedure according to its contract.

But what if it was the other way around?  What if it was the passenger in violation of the contract in force when he purchased the ticket?  What is the appropriate answer – in a libertarian or any other rational world?  Well, if the passenger didn’t move voluntarily…he got what the contract demanded.  I find no other libertarian answer.

I have found libertarians sometimes play fast and loose with “contract.”  For example, fractional reserve banking; for another example, specific performance – anything requiring the contracting party to perform that to which he agreed, in full.

I find this a dangerous practice.  Who is to say the valid object for contract?  Only the parties involved unless the contract inherently violates the NAP (which it inherently cannot do as regards the contracting parties).

We can opt for many possible methods to govern relationships between individuals: legislation, government regulation, custom, contract.  The first two of these clearly offer the initiation of aggression; custom is reasonably, but not absolutely, free from this defect.

Of these, only a contract between private parties is fully consistent with the non-aggression principle.  I have written before and offer again – a contract should be viewed as fully and legitimately binding on the contracting parties.  Libertarians should not take this lightly.

If not contract…what?


Whatever the contract said – if United was right or wrong – this was a horrendous action.  Even worse, apparently the CEO of the company defended the action more than once before changing his mind.

United’s product is customer service to the extreme.  Treating customers like this who are otherwise peacefully seated is never a good idea no matter the contract – especially not in today’s age of video and social networking.

Apparently $800 was not enough to get volunteers on this particular flight.  Pay, pay, pay – if it took $5000 to get enough volunteers, so be it.

On Tuesday, as the controversy surrounding the video failed to die down, shares dropped as much as 4.3%, or $3.10 per share, taking upwards of $950 million in market cap value away from the company based on 314 million shares outstanding.

Emphasis added, in case you missed it.

Reprinted with permission from Bionic Mosquito.