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Regulatory Issues: Selected Legal Issues Facing Tour Operators

Booking Conditions, Liability, ADA

While often overlooked as troublesome fine print on the back page of the brochure, your Booking Conditions can be an essential tool in promoting good customer relations, as well as providing valuable protection to your company in the event of a liability claim. Well drafted Conditions serve as the basis of the bargain between your company and its customers, and become a reference guide to answer the most commonly asked customer questions on important matters like:

• Payments and refunds;
• Situations in which you may impose a surcharge;
• Penalties for amendment or cancellation of a booking;
• Accommodation for passengers with disabilities.

Just as your customer policies are unique to your company, your brochure Conditions should be drafted to reflect your policies on the business and financial topics addressed below. In addition, the Appendix to this paper includes clauses which I recommend to address the legal topics, disclaimer of liability and accommodating passengers with disabilities.

At the outset, I stress that the following information and guidelines apply generally to tour operators that arrange travel packages and subcontract the component facilities, transportation equipment and services. The requirements are quite different for those tour operators that own or operate the facilities, equipment or services comprising the tour packages.

BOOKING CONDITIONS

Because your Conditions have legal significance, it is important to consider relevant statutory and common law to assure that each of your Conditions will be upheld in court, if challenged. This section includes the topics commonly covered, and the legal implications of how they are presented.

Important Points to Cover

• Contractual Rights. State at what point the customer and your company have rights and obligations in the booking. This commonly occurs at the time the booking is confirmed and the required initial payment is made. This date establishes the time when the customer incurs payment obligations, and the company incurs an obligation to hold space for the customer.

   

• Payments. When is the first payment due to confirm the booking, and when is the final payment due? What happens if the final payment deadline is missed?

   

• Pricing. Are prices quoted for twin share, with an adjustment for single or triple share accommodations? Explain the details of your policy. Do you reserve the right to make a surcharge to the published price? If you or your suppliers reserve the right to adjust the price after confirming a booking and accepting payment, it must be disclosed.

   

• Amendments, Cancellations, Fees and Refunds. State when and under what circumstances the customer may amend or cancel the booking and receive a full refund, and the amount of fees imposed at various times thereafter. Disclose your policy regarding amendment of the tour, or cancellation of the booking by the company. On this point it is common practice, and in certain circumstances a legal requirement, to offer the customer the option to take another trip or to receive a full refund.

   

• Passports and visas. Remind customers that it is their responsibility to have the necessary documentation.

   

• Travel Insurance and Trip Cancellation/Interruption Insurance. It's very helpful to offer all customers either a travel insurance policy or a cruise line's protection plan. When the inevitable unfortunate event occurs, the customers will either be protected, or you can remind them that the costs are their responsibility, because you recommended coverage and they chose not to take it.

   

• Liability and Responsibility. Accept responsibility for your acts, but disclaim responsibility for acts beyond your control and for the acts of others. If your company has merely arranged the components of the tour or package and you have no ownership or management interest in the companies supplying the services, it is important to disclose that you are acting merely as an intermediary or agent for the suppliers. When it can be made, this disclaimer creates an important legal distinction by shifting responsibility and liability to your suppliers.

   

• Passengers with Disabilities. Request that passengers with disabilities inform you at the time of booking, or as early as possible, of their need for assistance. The Americans with Disabilities Act applies to travel arrangements by requiring that "reasonable accommodation" be made to provide access to transportation, lodging and other places of public accommodation. It is important to remember that ADA is a law of the USA and therefore it applies to activities within the USA. It does not apply to service providers outside the USA.

  If your company has a policy requiring a traveling companion to care for a disabled passenger, or reserving the right not to accept passengers with certain disabilities, it should be reviewed carefully in light of ADA requirements.

   

• Smoking. Whether you permit or prohibit smoking on coaches, it is worthwhile to disclose your policy in advance so that no customers will be unpleasantly surprised.

   

• Forum for Disputes. You may wish to require that claims must be brought against you in the court in your state and county. Some companies prefer mediation and/or arbitration of consumer disputes, and have an arrangement with a reputable organization like the American Arbitration Association or the Better Business Bureau to resolve consumer disputes. As a general rule you will want to avoid litigation in another state.

   

• Seller's ID. Company name, address, telephone number, and if you are an ARC licensed and bonded travel agency, and/or a registered Seller of Travel in one or more states, disclose registration & bond/trust account.

Relevant Legal Principles

Space doesn't permit an exhaustive treatise here covering all the legal principles which apply to the relationship between a passenger and a travel agent/tour operator. They include numerous theories in contract, tort (negligence) and business law, and the level of responsibility is affected by one's status as principal, agent or independent contractor. I will highlight just a few principles of general application.

Several relevant legal principles must be considered in preparing your Conditions to assure that they will be upheld in court, if challenged. They involve the following areas of statutory and case law:

• Adhesion Contracts. An adhesion contract exists when one party dictates its standard terms to the other party, which must be accepted without negotiation or bargaining. When the standard terms include provisions which a court determines are so onerous as to be deemed unconscionable, the offending portion, or perhaps all of the standard terms will be set aside, and the contract interpreted as the court sees fit. Because booking conditions fit the profile of an adhesion contract, it is essential that the terms reflect policies which are reasonable, and which can be defended and explained if challenged.

   

• State Consumer Protection Statutes. Most states have adopted a consumer protection act, and while their provisions are not uniform, many share a common theme by declaring unlawful any "unfair or deceptive act or practice" by a business in a transaction with a consumer. These statutes establish a lower burden of proof for the court to award relief to a consumer than the "unconscionable" standard discussed above. Because the standard is not precise, but is based on the court's interpretation of general principles of fairness in identifying an unfair or deceptive act or practice, your consumer policies, as reflected in your Conditions, must be able to pass the fair and reasonable test.

Some points to consider are:

Your Cancellation & Refund Policy must bear a reasonable relationship to the dates, fees and costs your company will incur to handle and cancel the booking.

In the Responsibility Clause, it is not reasonable to disclaim responsibility and liability for everything.

• State Seller of Travel Laws. Several states require disclosure, at the time of booking, of a long list of details about the travel services to be provided. Whether or not your company is located in one of those states, if you sell to customers on a multistate mailing list, or through travel agents in other states, the disclosure requirements may apply. For that reason it's worthwhile to cover as many as possible as a standard practice in your Conditions. The list includes most of the Important Points discussed above, as well as:

a. A statement of account showing the amount paid and date of payment, the purpose of the payment, and an itemized statement of the balance due, if any.
b. Information about your trust/escrow account or performance bond (if required).
c. Name of the transportation carrier to be used, the equipment, and travel schedule.

Advice from an attorney familiar with travel law will help you avoid trouble here.

Helpful Hints in implementing the Conditions

• Your Conditions should be easily readable. Your selection of type size and ink tone are important. Avoid tiny print, and never use half-tone ink. It's ideal to use the same type and spacing as appears in the rest of your brochure, whenever possible.

   

• After you've prepared and printed the Conditions, make sure every customer receives a copy in a timely manner, i.e., before booking. Including the Conditions in your brochure is best. In the event that a customer books without having a copy of the brochure, it's worthwhile to enclose a copy of the Conditions with your initial invoice. Some companies require the customer's signature on the booking form acknowledging the Conditions, while others rely on a statement to customers on each invoice that "The Conditions apply to your booking, and your payment of this invoice signifies acceptance of the Conditions".

Preparing your Conditions is a project which deserves your careful attention, in the interest of good customer relations, avoiding exposure to unnecessary liability, and to assure compliance with travel regulations. To maximize their effectiveness, it's best to prepare and implement them in consultation with an attorney experienced in travel law.

AMERICANS WITH DISABILITIES ACT (ADA)

Reasonable accommodation to disabled persons