Mark Pestronk
Q: Our agency has very good relationships with luxury hotels and resorts abroad, so we are thinking of setting up a wholesale division that would do business with travel agencies, including their hosted independent contractors. What kind of steps can we take to protect ourselves against claims by disgruntled consumers, travel agencies and advisors?
A: Your wholesale division will have little or no direct contact with clients, so I don't recommend that you try to use the usual consumer disclaimer, such as the one found at www.pestronk.com/resources. Although you could try to require retailers and ICs to get their clients to agree to your consumer disclaimer, you would probably meet a lot of resistance from retailers and confused consumers.
Instead of a consumer disclaimer, the first step you should take to protect yourself should be a B2B disclaimer agreement with each retailer that signs up to do business with you. The agreement would cover points such as these:
- You are not responsible for the acts or omissions of travel suppliers.
- You are not responsible for weather problems, diseases or any other event beyond your control.
- The retailer releases you from all claims of any nature, including your alleged negligence in selecting suppliers or failing to fulfill the booking. While such releases would not be upheld in a business-to-consumer relationship, courts would probably have no problem applying them in the B2B context.
- The retailer agrees to indemnify you against all claims by the retailer's clients.
The retailer could signify its agreement by checking an "I agree" box or the like when signing up, or you could require the retailer to manually sign online or offline. One thing you should not do is merely to post the agreement online and state that, by proceeding with the booking, the retailer agrees to your terms and conditions. If the retailer denies agreeing, you cannot prove otherwise.
The second step that you could take would be to conduct a site inspection of each supplier each year or two so that you cannot be held liable for negligently recommending a supplier.
The third step would be to get indemnification provisions in your agreements with hotels and resorts, under which the property will defend you if you get sued because of something that happened at the property. Although some suppliers will refuse, you may be surprised at how many will agree.
Fourth, as part of each sale, do your best to incentivize the retailer to offer travel insurance. Buyers of such insurance are much less likely to bring suit if they suffer losses due to injuries or the like.
Finally, you could also consider getting wholesaler or tour operator's errors and omissions insurance, although you will certainly find that much of what goes wrong is not covered by the policy. In my experience, the main benefit of such insurance is to cover your attorneys fees in case of a lawsuit, even if the suit is frivolous or the grounds for the suit are not covered by the policy.