Q: Is there a difference between the legal responsibilities of a tour operator and a travel agency? I had thought that the operator was responsible for the actions of the travel suppliers, but when I recently read an operator's terms and conditions, the operator seemed to disclaim responsibility for suppliers' acts or omissions and just about everything else that could go wrong. Is my agency a tour operator when I lead a few tours per year to my favorite destination, and if so, do my responsibilities change?
A: Under U.S. federal and state law, there is no difference between the legal responsibilities of a tour operator and a travel agency. Both are responsible for their own acts or omissions, but neither is responsible for the acts or omissions of third parties such as travel suppliers, unless they voluntarily assume that responsibility.
Both can be agents under the law, which means that they are authorized by a principal (a supplier) to enter into a transaction that binds the principal but not the agent. And both can be principals if they purchase travel for their own accounts and resell it at a markup.
Under European Union law, there is a legal distinction between a mere agent on the one hand and an "organiser" (British spelling) of a travel "package" on the other hand. A "package" means "the prearranged combination of not fewer than two of the following when sold or offered for sale at an inclusive price and when the service covers a period of more than 24 hours or includes overnight accommodation: (a) transport; (b) accommodation ... (c) other tourist services". An "organiser" is an entity "who, other than occasionally, organizes packages and sells or offers them for sale, whether directly or through a retailer."
EU law requires the organiser to be responsible for the suppliers' performance of the services in the package. If a supplier defaults, or if the package is not operated according to the contract, it is the organiser that must make good to the consumer, except where the consumer is at fault or for reasons such as acts of God.
There is no equivalent responsibility under U.S. law, with the sole exception of the U.S. Department of Transportation's Public Charter rules, which have been in effect since 1978. The rules require the charter operator (i.e., the company selling seats to the public) to provide participants with a Participant Agreement stating "That the charter operator is the principal and is responsible to the participants for all services and accommodations offered in connection with the charter."
Of course, a noncharter tour operator can voluntarily assume such responsibility if it wishes, but, judging by the terms and conditions that I have seen (and drafted), such assumption is quite rare. Instead, operators' terms and conditions are very similar to the agency disclaimers that you can find at www.pestronk.com/free.html.
In practice, any travel agency can become a tour operator by putting together a package, marking it up and selling seats. Even if you do just a few tours a year, you are a tour operator when you do them.
You can slip in and out of the two different roles with ease, as your legal responsibilities do not change, unless you voluntarily assume responsibility for suppliers' acts or omissions.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].