Mark Pestronk
Q: At the beginning of the pandemic, some major cruise line were paying commissions on canceled cruises and then promising to pay again when the passenger used a future cruise credit (FCC). Now, cruise lines are making fewer commitments, but most appear to be still promising that commissions will be paid on sailings for which FCCs are used. Could a cruise line change its policy and refuse to pay commission on cruises that are being booked now using FCCs? What if the booking is not made until 2022? Even if the lines couldn't totally refuse, could they cut the commission levels for future bookings using FCCs?
A: Under general principles of agency law, "an agent is entitled to a commission when he brings the minds of the parties together, in that he has procured a buyer ready, willing and able to purchase on the seller's terms and conditions." This is called the procuring cause doctrine.
A corollary to the doctrine is that "if an agent is the procuring cause of the contract, he is entitled to the commission, even though the principal takes it out of his own hand and completes it. The originating cause, which ultimately led to the conclusion of the transaction, is held to be the procuring cause."
In other words, if your work leads to the ultimate conclusion of the transaction, then you are entitled to a commission, even if the cruise line changes the transaction. In the case of FCCs, a booking that is made using an FCC was clearly a booking that was procured at the time of the original sale.
The same analysis would apply to a cruise that was first booked with an FCC and then canceled and rebooked with a second FCC: The procuring cause of the second booking is still the first sale.
Finally, under the procuring cause doctrine, the cruise line could not cut the commission below what was in effect at the time of the original sale. Nor could it exclude certain parts of the sale from being commissionable.
On the other hand, these general principles of law can be superseded by the terms of an agreement between your cruise line and your agency or another entity acting on your behalf, such as your host or a consortium.
For example, if your agency agreement for 2021 stated that, starting Jan. 1, 2021, commissions on bookings using FCCs would earn only 5%, then the contractual provision would prevail.
No commission agreement that I have ever seen deals with the FCC issue, but I would not be surprised if future contracts contained such clauses. I hope that they will provide that bookings using FCCs will be subject to the same commissions as original bookings.
In addition to the kind of contract mentioned above, a cruise line could simply send a notice changing its standard terms for future bookings, and it would apply to all future bookings by agencies that did not have their own, host or consortium contracts.