Q: How would I go about writing a group contract? Is there a form or checklist that I can start with? If not, what would go into a group contract, and how could I protect my agency from risks associated with groups?
A: In the travel business, the term "group contract" means different things at different levels in the distribution chain. So what you would write depends on who the contracting parties are, what their duties are and how the money flows.
I count six disparate kinds of relationships that my travel agency clients have called "group contracts." Let's try to clear up the ambiguity by giving each kind its own name:
• Supplier group contract: a contract between an up-line travel supplier such as an airline, cruise line, hotel, tour operator, travel wholesaler or consolidator, on the one hand, and a travel agency, on the other hand, providing discounted fares or rates, under which the agency either does or does not assume the risk of unsold seats, cabins, rooms or places, and either does or does not receive a commission.
• Direct group contract: a contract between a travel supplier of the type named above, on the one hand, and a corporation, association or government agency, on the other hand, under which a travel agency receives a commission as the agency of record.
• Client group contract: a contract between an agency, on the one hand, and a client corporation, association or government agency, on the other hand, under which the former shifts the risk of unsold seats, cabins, rooms or places onto the latter.
• Group representative contract: a contract between an agency, on the one hand, and one or more individuals that represent a group that is not itself a legal entity such as such as a student group, destination-wedding participants, family reunion or set of couples, on the other hand.
• Meeting and incentive group contract: a contract between an agency and a corporation, under which the agency is required to negotiate contracts with suppliers and perform other services in connection with the corporation's meeting or incentive program.
• Destination group contract: a contract between an agency, on the one hand, and a destination subcontractor such as a shore excursion operator or destination management company, on the other hand, to handle the agency's incoming group.
The six kinds of contracts have nothing in common except that an agency is named as a party in each. By "agency," I mean to include tour operators, as there is no contractual distinction in U.S. law between the two kinds of entities.
So your first step is to identify which of the six types you need. In most cases of supplier group contracts and direct group contracts, the supplier writes the contract, in which case your job is to try to revise it to make it less one-sided. However, smaller suppliers will sometimes accept a contract that you have written.
If you need a client group contract, group representative contract, meeting and incentive group contract, or destination group contract, you can start by listing each parties' duties in bullet-point style, and then describe the payment, group reduction and cancellation terms in detail. You or your attorney can then convert your notes into a contract fairly easily.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].