by Ken Whitman, Esq.

Do you think you could play a board game or recreational competitive sport without any instructions or rules?  Trying to play a game like Monopoly, Life, Risk or 8-Ball in billiards without instructions or game rules is a real challenge and a sure-fire way of ending up in a fight with your friends or family members. 

Operating a travel business without formal written Terms and Conditions carries the same risk of unhappy players or participants, and a much greater risk of a dispute and someone ultimately being sued because of an undefined or undisclosed rule.

As the Program Administrator for the largest Travel Agents and Tour Operators Professional Liability program in the U.S. we have found, to our surprise, many businesses are operating without rules established between them and their clients.  Some companies have basic Terms and Conditions, but many fail to address important common questions and basic pitfalls encountered in this industry.  This can make a travel company responsible to pay for something when technically and legally they never were required.  

Unfortunately, it happens all the time: 

• Why should a travel advisor or agent be responsible, when the hotel it booked, decided at the last minute to close the swimming pool for maintenance and repair?
• When the bus company you hired to transport a group breaks down or is involved in a motor vehicle accident, should you bear responsibility, and absorb all the subsequent damages that arise from that incident, like a missed Broadway show that cost $200 per ticket?
• When your customer is detained at a foreign airport or not allowed to board a plane without the appropriate visa, they may blame you, as the travel agent, tour operator or travel advisor.
• An unfortunate drowning in a hotel swimming pool in the Caribbean or a theft of a customer’s wallet at the town marketplace are events that your customers may look to you for payment or reimbursement.
• A flight cancelled by an airline due to a mechanical problem causes your customer to miss one of two nights planned at a luxury hotel.  Who is going to refund that $550 per night hotel room?

The list of potential mishaps can go on and on.  There are countless things that can go wrong.  That is why every travel company, advisor or agent should have instructions/rules, or as called in this industry, Terms and Conditions.

So, what happens when there are no rules issued by the travel company or the Terms and Conditions are inadequate?  It often begins as a customer dispute, without any directions or guidance as to responsibility, expectations and how the problem may be resolved.   These disputes can sometimes be resolved quickly when those involved are reasonably able to recognize what or who caused the problems.  However, when neither party accepts responsibility for a problem that is when it usually turns into a difficult situation. Mistakes and problems happen sometimes because a customer has made some type of error.  Sometimes it’s a third-party (neither the customer nor the travel agent or advisor), and sometimes travel agents and travel advisors make mistakes.   There are other times when nobody has made a mistake and customers are unreasonable, have unrealistic expectations and expect their tour operator, travel advisor or travel agent to absorb all additional costs regardless of whether they were wrong or made a mistake. 

If there are no written rules, instructions or Terms and Conditions for a dispute to be governed by, and the parties are unable to resolve it amicably, a dispute can end up in court.    If there is no statute or case law governing the disputed matter, it sometimes comes down to a judge’s discretion.  However, when a travel company has Terms and Conditions that provide rules or guidance with respect to a particular problem, a judge can utilize those Terms and Conditions as guidance when rendering a decision. 

What types of provisions should be contained in Terms and Conditions?  Terms and Conditions can be quite detailed and extensive.  Terms and Conditions can also be shorter, more concise and less detailed. 

Some companies may elect to have hundreds of paragraphs, touching on things as remote as: if a passenger becomes unruly, under the Terms and Conditions they have the right to refuse to allow that customer to continue with their tour; or that they won’t be responsible if you are bitten by a tick.  It’s a matter of preference how much to have in your Terms and Conditions, but the more that is spelled out, the less there is to argue about. 

Can a company just make any rule they want?  Most states will recognize that two parties to a contract/agreement are free to agree to, or bargain for whatever terms they desire, as long as the agreement does not violate public policy.   Certain terms and conditions will violate public policy when they are unreasonable or unconscionable. 

When travel companies state in their Terms and Conditions that they are not even responsible when it’s their own mistake or negligence, that is where the courts often draw the line, and will refuse to enforce such terms, because they are so one-sided.  So, whether you go short and concise or long and exhaustive, what type of provisions should be considered in the Terms and Conditions of a travel company? 

Disclaimers – Responsibility Statements

Probably the first and most important items that any travel company should consider in their Terms and Conditions are Responsibility Statements and Disclaimers. 

In the U.S. there is a unique body of law for travel agents and tour operators that holds if a tour operator or travel agent discloses to its customers that the services contracted for hotels, airlines, bus and limo transportation, cruises, day excursions, etc., are provided by independent third-party suppliers, which the travel agent or tour company, neither owns, operates or controls, these travel companies will not be liable for the negligent acts of one of those third parties.  

Notwithstanding, a travel agent or tour operator could still be found liable, even if they have properly disclosed the independence of the suppliers in their Terms and Conditions.  Two of the more common reasons a travel company may be found liable, despite this type of disclaimer are: 

1) If it can be shown that a travel company was negligent in its selection of a vendor; or
2) If a travel company failed to warn, within reason, of some common issue or hazard associated with the travel, activity or location a customer is visiting.    

Of course, as with any business, if a travel company is independently negligent, it will be held liable.  However, since third-parties are usually fulfilling the components or obligations of a travel itinerary, more-often-than-not a travel company’s negligence is indirect or contingent liability, as set forth above. 

Simply explained, a travel company can be responsible for “negligent selection” when they fail to properly research, investigate or vet a vendor that will be used for travel arrangements.  The vendor selection process by a travel company and the required extent of research, investigation and vetting can vary greatly depending on many factors. 

With respect to the second basis for liability to a travel company, it can arise from a travel company’s duty to warn.  While a travel company is not a guarantor or insurer of its customer’s safety, it has an obligation to see to it that travel is reasonably safe.  A significant part of that obligation is to provide disclosures or warnings to its customers about situations and dangers that may be encountered during a trip or a tour that put a traveler at risk. 

As a travel company, you should be cognizant of the fact that if you are operating without agreed upon rules for a given transaction, a court may decide that your company should bear the cost of such a loss, even though it was not your fault.  Therefore, responsibility statements should disclaim responsibility for common items that could happen in any business transaction or relationship that may be caused by a third-party. For example, Terms and Conditions may contain disclaimers denying responsibility for strikes, civil commotion, political unrest, natural disasters, power shortages or failures, fires, inclement weather, labor disruptions, acts of terrorism or war, acts or restrictions by governmental agencies, bankruptcy and insolvencies, etc.   These are all factors, beyond a travel company’s control, which could result in loss to a customer.

Depending on the focus of the travel business, responsibility statements may also address bad things that could happen while at certain destinations, such as criminal acts, specific insect-borne illnesses that can be contracted, water levels rising or dropping that restrict passage by vessels, high altitude sickness, revolution, kidnap and ransom, or the potential for attack by wild animals.  

Wild Animals
There are tour operators that arrange trips where travelers get to ride on an elephant or a camel.  These safari or nature tour operators can protect themselves by disclaiming liability or responsibility for the associated risks of riding on the back of a wild animal. 

Riverboat Cruises
When travelers have waited a lifetime and invested their savings for a cruise adventure down the Rhine or Danube, only to arrive and discover that they will now have to tour those areas by bus, because the river levels have become too low for a vessel’s passage, customers may seek to hold you responsible for an Act of God or the decision of a vessel operator. 

Where there are common, known dangers or potential problems associated with a given activity or location, a travel company should disclose the risks and disclaim responsibility for that potential occurrence.  For activities that are often considered inherently dangerous, including language in the Terms and Conditions in the form of an assumption of liability by a traveler is very important, in addition to securing a signed waiver or release in connection with those activities. 

All-Terrain Vehicle (ATV) Tours
If there is a tour on ATVs, the risks of flipping and the resultant injuries should be acknowledged and assumed by the participants.

Exhaustive Terms and Conditions or Concise?
Having a written set of rules is important.  It’s up to each travel company to decide how much is enough, or whether they can have too much.  Those considerations involve business decisions. While exhaustive Terms and Conditions may be great from a disclosure and legal standpoint, a business must decide, when or if there can be too much in their Terms and Conditions. 

Clearly though, without Terms and Conditions a travel company may ultimately be held responsible for things that it otherwise may not have been technically nor legally obligated to pay.

Other Important Terms and Conditions

While responsibility statements and disclaimers are important there are other provisions that a travel company should consider referencing in its Terms and Conditions. 

The following are some categories to consider when operating a travel company; however, it is recommended to consult an attorney to review your Terms and Conditions to assess whether they are sufficient for your operation and likely to be enforceable as drafted:

1. Payment Terms and Conditions – When are payments due?  What happens when late?  Are they refundable?
2. Flight or Other Transportation Delays – Who is responsible for the costs associated with delays caused by independent third-party travel suppliers (flight delays, traffic delays, mechanical breakdown or failure)?  For example, when you book a group of students to compete in a musical competition and weather delays their flight causing them to miss the competition, who, if anyone, is responsible for the monies paid for the competition and hotels?
3. Recommendations for Trip Insurance – Does your company recommend trip insurance to absorb any unforeseen delays, cancellations, baggage losses, or medical incidents or injuries that take place during travel?  In addition to such a recommendation, the terms may also disclaim any responsibility for the claims decisions made by the trip insurance company recommended.
4. Booking and Cancellation Provisions of Travel Suppliers and Vendors - You should disclose whose cancellations provisions control (your cancellation provisions or a vendor’s).  If it’s your cancellation provisions, make sure that they are clear and conspicuous.
5. Visa and Passport Responsibilities - As a travel advisor you should make sure that you discuss passport and visa requirements.  Part of that responsibility should include ascertaining a traveler’s citizenship, so requirements can be determined.  The provision should state that the responsibility of securing passports or visas and verifying the correctness of these items as well as allowing sufficient time to secure the required items is solely the customer’s responsibility.
6. Methods for Dispute Resolution – Customer disputes can be handled in numerous ways, mediation, arbitration or through the courts.  If you are going to require a dispute be resolved via a certain process, the Terms and Conditions should clearly outline that process.  For additional information about arbitration clauses in your Terms and Conditions, please see the companion article in this edition of the newsletter.
7. Forum Selection and Venue Clauses – This is a clause that designates in what location someone can sue your company.  If you are located in Nashville, Tennessee, you might not want someone to sue you in their home state, such as Houston, Texas, where you have to hire a lawyer that you do not know and travel to Texas for court proceedings.  You can require your customers sue you in your home state, and you can even designate which court you want to be sued in.  
8. Governing Law Provisions – Like the selection of the forum or venue, you can also designate that the law of your home state will govern any disputes between your company and your customers. 

 

Are Signatures Required for Terms and Conditions to Be Binding?

Unsigned Terms and Conditions – Generally, courts will recognize and enforce Terms and Conditions (but not necessarily all Terms and Conditions), even if not signed by a customer, provided it can be demonstrated that the terms and conditions were received by a customer and were legible in terms of the font size and their placement.  Terms and Conditions can be placed in brochures, with itineraries and invoices, online or any other reasonable placement that is communicated to a customer. 

While a customer attempting to refute Terms and Conditions may attempt to say they never read them, typically that is not a valid defense, as long as the travel company can demonstrate that they were provided or communicated to a customer.   

Signed Terms and Conditions – Manually signed or signed by computer -Generally, signed Terms and Conditions are not required in order- to bind a customer; however, it is always a better practice to have a signed or digitally acknowledged set of Terms and Conditions.  Digital acknowledgements are often demonstrated by date, time and IP address recordings.  While signed Terms and Conditions may be impractical or difficult from a business’s standpoint, from a legal and risk management standpoint it is preferred. 

Minors and Terms and Conditions –Generally, Terms and Conditions supplied to the person making the reservations (the paying party) will be applicable to all member of the party, including children.  However, when those Terms and Conditions potentially affect the rights of an injured minor, the courts may be less likely to enforce those terms against a minor.  

Nonetheless, when adventure activities are involved, and you are securing an assumption of liability and waiver or release of rights, you should obtain a parent’s signature.  While the waiver may not be enforceable, there is value in securing it anyway.

Terms and Conditions Should Receive Periodic Review

Often companies draft Terms and Conditions when they start their business and never review or revise them.  Travel circumstances, industry practices and laws are constantly changing and evolving.  It is always best to make sure you are up-to-date, so the courts do not deem important provisions unenforceable or to allow the absence of terms cause them to hold you responsible for someone else’s misdeeds.  It is our recommendation to consult a legal professional periodically to review your Terms and Conditions.  An attorney that has experience in Travel Law may be in the best position to review your Terms and Conditions, to assess whether they are sufficient for your operation and enforceable as drafted.

Thorough and meaningful Terms and Conditions are one of the best ways to help protect your company. They are very important.  Don’t fly without them.
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Kenneth F. Whitman, Esq., is a senior program manager at Aon Affinity Travel Practice.

This article is provided for general informational purposes only and is not intended to provide individualized business, insurance or legal advice. You should discuss your individual circumstances thoroughly with your legal and other advisors before taking any action with regard to the subject matter of this article.