Mark Pestronk
Mark Pestronk

Q: A major corporate client of our agency wants us to arrange a couple of charter flights for 200 of the clients' employees and family members, who will travel to a remote island in late 2019. We have no experience in chartering large aircraft, but we know of a broker that can get airlines to agree to these kinds of charters. Do we need any regulatory authority to sell these charter flights to the client? Who should sign the broker's contract, the client or our agency? Do we sign the airline's charter contract, or does the client? To protect ourselves from liability, what should our agreement with the client provide for?

A: Assuming that the corporate client is not going to sell seats on the charter flight, you do not need any regulatory authority or other governmental permission to arrange these charters. The airline will need authority to land in the country where the island is located, but that permission should be easy for the airline to obtain if it doesn't have it already.

You mention three kinds of contracts: the broker's contract, the airline's charter contract and your corporate client contract. From a purely legal liability perspective, the client should sign all three, as you would then be relieved of liability for any nonpayment, nonperformance or mishaps.

However, you are probably reluctant to have the client sign the broker's and the airline's contracts because you don't want to reveal either your commission from the broker or the price that the airline is charging, which the broker will mark up. Therefore, you should sign the broker's contract and have the broker sign the airline's contract.

Before you sign with the broker, you need to have a contract with the client. It should specify that you have permission to sign the broker's contract in the client's name as "attorney-in-fact" for the client.

An "attorney-in-fact" is not an attorney but rather just an agent with specific authority to sign the client's name. If the term sounds too legalistic or confusing, you don't have to use it; just provide that you can sign any travel supplier's or broker's contract in the client's name.

On the signature line of the broker's contract, you would write, "ABC Travel Inc. as attorney-in-fact for XYZ Corporation," and then just sign your own name.

The broker's contract will require you to pay the broker by fixed deadlines. To protect yourself, you need to specify in the contract with the client that the client will pay you well before you have to pay the broker and that you may cancel the broker's contract if the client does not pay on time.

The broker's contract will also contain terms and conditions that the client will need to agree to, so you can attach the terms (other than the price and your commission) to your contract as an exhibit and provide that the client must agree to those terms.

Finally, to protect your agency, you should provide that the client will indemnify your agency against all supplier and traveler claims related to the trip, excluding claims related to your negligence.

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