Mark Pestronk
Q: At the bottom of the homepage on my agency's website we have some logos of preferred suppliers under the heading, "Our Partners." In our independent contractor contracts, we call the IC our "Partner." Some wholesalers' contracts refer to our retail agency as their "Partner." I have even seen TMC presentations where the agency calls clients its "Partners." Are these entities really partners? What does "partner" really mean? Do our uses create potential legal problems for us? What should we call them instead?
A: Suppliers, ICs, wholesalers and clients are not your partners, and you should not call them your partners. Doing so creates potential liability for your agency.
Under the law of most states, a "partner" is defined two ways: first, it can be a person or company that is a co-owner of a business or venture, sharing in its risks and profits. Second, someone is a partner -- without necessarily sharing profits or risks -- if they represent themselves (or knowingly allow themselves to be represented) as a partner, and a third party reasonably relies on that representation to their detriment.
Under either definition, partners are jointly liable for the acts or omissions and the debts of the partnership or joint venture. "Jointly liable" means that each partner is liable for all of the partnership's debts, no matter which partner incurred the debt, The only exception is for "limited partners" in a partnership, as their liability is confined to what they invested.
So, if a third party such as your client has a claim for damages against a supplier such as a hotel because of an injury or unpaid refund, the client may well sue your agency on the grounds that you represented yourself (or allowed the client to believe) that you were the hotel's partner. Such a suit is especially likely if the hotel is in a foreign country and a U.S. court has no jurisdiction over it.
Even if your use of the term "partner" is limited to a contract that a client would not ordinarily see, an aggressive personal injury attorney will obtain the contract in the lawsuit and use it as evidence of a partnership. If you call your ICs "partners," the same thing may happen: When the IC makes a mistake that causes a loss big enough to justify retaining an attorney, the attorney will eventually find evidence needed to allege plausibly that the IC is your partner.
I realize that, in marketing, using the term "partner" creates a warm and close relationship tone, and I regret that there is no perfect substitute. That is probably why so many travel industry executives allow the word to be used despite knowing or suspecting the legal risks.
For listing suppliers on your website, the terms Preferred Supplier or Preferred Provider should work. In the case of ICs, your contracts should call them Independent Contractor, Contractor, IC, Independent Agent or IA. In wholesalers' contracts, you should be called Agent or Agency. For clients, you should use Client or the company's actual name.