Our agency buys a lot of
airline tickets from consolidators and marks them up. When our
client pays by credit card, we usually put the charge on our own
merchant account. Does processing the sale this way increase our
liability in case our client is killed or injured in an airplane
accident?
A: Using your own merchant account does not
increase your liability for accidents, as you are only liable for
your own acts or omissions. Because you did not cause the accident,
you would not be liable for it regardless of how the sale was
structured.
Under the law of every state, a company is liable only for
wrongs that it commits, such as breaches of contract or negligence.
For example, if your agent promises to make a reservation but fails
to do so, your agency would be liable for breach of contract.
In the case of airline accidents, your agency could not possibly
be liable, with two exceptions.
First, if the plaintiff could prove that your agent knew or
should have known about the airline's poor safety record and that
the passenger would not ordinarily have known about it, your agency
could be held liable for negligently failing to disclose the
dangerous record.
Second, under the doctrine of "undisclosed principal," your
agency is liable for the acts of a supplier if you did not disclose
the name of the supplier at the time the sale was made.
Because these exceptions are so rare, agencies can feel
confident they almost will never lose a lawsuit arising out of an
airplane accident.
Nevertheless, using your own merchant account probably makes it
more likely that you will be sued in the first place, even if you
are eventually found not liable.
This is because the plaintiff's personal-injury lawyer will
probably mistakenly assume your agency is the prime contractor and
that the airline is your subcontractor.
Therefore, you will be dragged into the suit and kept there
until your attorney can show that you are just a sales agent of the
airline, even when your merchant account is used.
As you probably know, litigating your way to a motion to dismiss
or a motion for summary judgment can cost tens of thousands of
dollars in complicated cases, even if you have no liability
whatsoever.
To minimize the likelihood that you will be sued when you use
your own merchant account, have each traveler over age 18 sign a
disclaimer.
You can find a good sample on TravelWeekly.com by searching
under "Pestronk AND disclaimer" and clicking on the column dated
Feb. 10, 2002.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He answers your questions in the TravelWeekly.com
Legal Ease forum. To contact Mark directly, e-mail him at [email protected].