A new commission policy trumps 'procuring cause' doctrine

By Mark Pestronk
Mark PestronkQ: Recently, the parent company of Regent Seven Seas and Oceania announced an interesting commission policy for bookings transferred from one agency to another. If the booking is transferred (or canceled and then rebooked) within 30 days after it is made and before final payment, the cruise lines will pay 10% commission to the second agency and nothing to the originating agency. If the first agency keeps the booking for more than 30 days, then the originating agency gets 10% commission and the second agency gets nothing. Isn't this policy at odds with the "procuring cause" doctrine, which holds that the agency that is the procuring cause of the sale is always entitled to the commission? Does it mean that an independent contractor who quits Agency A and moves all his bookings to Agency B is no longer liable to Agency A for transfers within 30 days after the booking?

A:
The procuring cause doctrine applies only when there is no contract governing the issue of which party is entitled to the commission. Here, the cruise lines have made their policy part of the contract between the line and each agency, so the policy trumps the doctrine.

Of course, the overwhelming majority of cruise bookings have not announced such a policy, so the procuring cause doctrine applies to them. In brief, the doctrine is that "an agent is entitled to a commission when he brings the minds of the parties together, in that he has procured a buyer ready, willing and able to purchase on the seller's terms and conditions."

In other words, the agency that takes the booking is entitled to the commission, as long as the client goes through with the sale on the same terms, regardless of whether the booking gets transferred later. The rule applies not only to cruises but also to tours and any other commissionable travel arrangements.

When Agency A is entitled to the commission, it can sue the independent contractor who deprives it of the commission by getting the booking transferred or canceled and rebooked. It can also sue Agency B for the commission if the supplier paid Agency B.

You raise an interesting question: If, under the supplier's policy, you are not entitled to the commission for bookings transferred within 30 days, and if the contractor gets the bookings transferred within that time, is the contractor no longer liable to you?

At first blush, it might seem that, if you were never entitled to the commission, you cannot claim it from any party. However, that would not be correct, as the contractor would still liable to you for interference with contractual relations. Except for the contractor's inducement of the transfer, you would eventually have become entitled to the commission.

It is important to note that these legal rules should not affect any agency's willingness to cooperate in transferring bookings to another agency, if that is what the client really wants. Even if you cooperate, you are still entitled to the commission from the vendor under the procuring cause doctrine, unless the vendor has a policy to the contrary.

Ideally, you should have an independent contractor agreement that spells out the contractor's obligation to compensate you for the lost commission share when the contractor gets a booking transferred, no matter when it occurs.

Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at mark@pestronk.com. 
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