Mark Pestronk
Mark Pestronk

Q: I have noticed that when travel suppliers present us with their standard commission or override contracts, they often use the word "partner" or "partnership" in the title of the contract. Examples are "preferred partner agreement," "strategic partnership contract" or "marketing partnership agreement." I find it ironic that any supplier calls us a partner, since suppliers generally treat agencies as anything but true partners. In any case, does using the name "partner" create any liability for us?



A: Suppliers' use of the words "partner" or "partnership" is just happy talk designed to entice you into signing.

However, an aggressive attorney for a client who suffers a loss due to the supplier's negligence could at least try to sue your agency under the partnership theory, using the title as alleged evidence of your liability.

In law, the basic rule of a partnership is that each partner is liable for all the obligations to third parties. In other words, each partner is responsible for the acts or omissions of all the partners within the scope of the partnership, even if the partner being sued had nothing to do with the act or omission or even knew anything about it.

So it is legally risky to be a partner of a travel supplier. If something goes wrong on a trip due to the supplier's negligence or breach of contract, your agency is liable.

For example, if a cruise line negligently fails to warn passengers about potential dangers at a port, the partner of the cruise line could be liable for that negligence. The injured passenger could sue the partner without suing the cruise line.

Of course, naming the contract a "partnership" agreement or the like does not necessarily make you the supplier's partner as a matter of law.

To be a partner, there must be an agreement that provides that the partners share in the profits and losses of the partnership.

Obviously, there is no sharing of profits and losses under travel supplier agreements. Therefore, these agreements do not create actual partnerships, so the agency should not be held liable for the suppliers' acts or omissions.

Nevertheless, an aggressive plaintiff's lawyer would undoubtedly try to make the most out of the title to the agreement, if he or she obtained a copy during the course of a lawsuit.

Since an agency is not otherwise liable for the acts or omissions of travel suppliers, the title could enable the attorney to at least allege that you are liable as the supplier's partner.

Whether a judge or jury would agree that you are the supplier's partner is unlikely, but I am sure that you will agree that it would be best not to give an aggressive lawyer any more ammunition. Therefore, I recommend that you try to change the word "partner" to "agent" and "partnership" to "agency."

If the supplier will not agree to that change, try to add a provision to the agreement stating that the supplier will indemnify your agency against all claims arising out of acts or omissions of the supplier or any allegation that you are the partner of the supplier.
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