Q: In previous columns, you have recommended that our agency avoid liability on group hotel, cruise or tour contracts by having the corporate client sign the contract or at least by signing "as agent for" the corporate client. However, one major group client refuses to have supplier contracts in its name, and another major client (an extended family's reunion) is not a corporation or other legal entity, so it cannot sign contracts anyway. Are we doomed to be stuck in the middle, or is there another way out of our dilemma?
A: There is another way to avoid getting stuck with liability to the supplier for cancellations or liability to the client for the supplier's acts: You can draft your group contract so that you pass all of the potential risks onto the group. If there is no group to contract with, you can do the same for your agreements with the individual participants.
To take a simple example, if the hotel's contract requires you to pay penalties in case the group cancels, your contract with the group or trip participant should mirror those penalties. In fact, your contracts should go further and provide for a penalty that you can keep for having done the work, such as $50 or $100 per person.
Just as importantly, all of the disclaimers and limitations of liability that you find in the supplier's contract can be incorporated into your group contract or participant agreement. Then, when the supplier defaults or exercises any rights it might have to cancel, the clients could not recover any more from you than they could from the supplier.
For example, if a convention hotel reserves the right to move your group to another hotel in case of overbooking, your contract with the group or participant should state that the hotel has this right and that your agency has no liability should the hotel exercise its rights.
For group cruises, the cruise line will usually issue you a non-negotiable contract that allows the cruise line to do almost anything, including change the itinerary completely or the cruise dates without liability, and to cancel the sailing entirely and limit its liability to refunds. If you sign such a contract, you need to make sure that the corporate group or the individual travelers sign your agreement clearly stating that your agency is not liable if any of these things occur.
Group cruise contracts, ship charter contracts and aircraft charter contracts also contain technical legal language invoking obscure laws and treaties that appear to limit the operator's liability. In charter contracts, you find phrases like "force majeure," "acts of war," "acts of God" and even "restraint of princes."
When you encounter such laws, treaties and odd phrases, the supplier is limiting its liability for injuries and cancellations to the maximum extent allowed by law. If someone is injured or the supplier defaults and the client sues your agency for the loss, you might not be able to recover from the supplier because of such language.
The key, again, is to pass the risk onto the client. For example, you might simply provide, "Agency shall have no liability for the cruise line's acts or omissions, and Agency's liability shall not exceed the cruise line's liability."
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, e-mail Pestronk at [email protected].