Q: Over the summer, Carnival Cruise Lines launched its Conversations initiative. It held lots of meetings with travel agencies and pledged to take steps to be more responsive to agencies' concerns. In the past month or so, Carnival has taken some of those steps. However, my agency, which sells a lot of Carnival cruises, has a commission agreement with Carnival that appears to be very one-sided. Do you think Carnival should be responsive to changing the agreement?
A: The latest version of the standard Carnival commission agreement for high producers is called a "Travel Partner Agreement." It's my belief that partnerships should be two-way streets. Carnival could show its responsiveness by making that agreement somewhat less one-sided than it is now. Here are examples of what I am referring to:
• Carnival reserves the right to change the commission levels and the portions of the client's payment that qualify as commissionable at any time with no notice.
• If you have an annual sales quota to maintain a certain commission level, Carnival can change the quota at any time if there is a "material change" in its ship capacity.
• No commission will be paid on bookings that originate on any website not authorized by Carnival.
• You have to advise clients about how to access Carnival's online travel-document system and Carnival's online Ticket Contract. If the client wins a judgment because the client claimed he never saw the Ticket Contract, you have to indemnify Carnival against its loss; i.e., reimburse Carnival for the amount of the judgment.
• When payment is by credit card, Carnival sends you the commission minus any "third party processing fees," which could be interpreted to mean that Carnival can force you to start absorbing its merchant fees anytime it chooses.
• When Carnival lowers its fares, you are prohibited from canceling and rebooking the client, even though such activity appears to be routine. The existence of the clause means that Carnival can prohibit the practice any time it wishes, and Carnival has the right to deduct the fare difference from any commission payment to you.
• You cannot have ads or solicitations that state that you will sell Carnival below "approved rates or at any special price, discount, or reduction not specifically authorized by Carnival." Carnival offers examples of prohibited wording, such as "We will beat any price" and "Call us for additional discounts."
• There are over a dozen other pages with limitations on ads, website verbiage, trademark usage, search and pricing. These rules are so complicated that it would take a specialized marketing staff just to comprehend them, but if you repeatedly violate them, Carnival can not only terminate the agreement but also cease accepting reservations from you.
• In a few places, the agreement curiously -- and falsely -- states, "Travel Agency is not an agent of Carnival." The purpose of these disclaimers is probably to allow Carnival to disavow any commitments that you make to clients regarding availability, fares or anything else, if it chooses to do so.
• You are responsible to Carnival for your pricing errors, but not vice versa.
• Carnival can terminate the Agreement without cause (i.e., for any reason or no reason at all) on three days' notice.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].