Mark Pestronk
As the Covid-19 coronavirus continues to spread, many legal questions about advisors' and suppliers' rights and liabilities will arise. I address some here.
Q: If a travel supplier such as an airline, cruise line, resort or tour operator is operating as usual, does the supplier have to refund my client's money if the client decides not to travel based on Centers for Disease Control and Prevention or State Department advice?
A: No law or regulation requires such a refund or even a credit toward a future trip. If the supplier offers a refund or credit, it does so as a gesture of goodwill.
If the supplier and client have an agreement, such as an airline's contract of carriage, a cruise line's passenger contract or a tour-participant agreement, any rights that your client has would be found in the agreement. You should carefully examine the agreement, but I would not count on finding anything useful in it.
Q: Doesn't the concept of force majeure mean that the client gets his money back if an act of God makes performing the trip dangerous?
A: No; force majeure excuses the supplier from performing the trip if it cannot do so because of an act of God or the like. It does not require the supplier to cancel or to make a refund.
Q: If a supplier cancels a trip, is it legally required to refund clients' money or can it provide a credit toward a future tour?
A: When airlines cancel flights, their contracts of carriage give the passenger the option to get a full refund. Cruise lines, resorts and tour operators' obligations are governed by their respective terms and conditions, and if they provide only for a future credit, then that is all the supplier is obligated to offer.
Limited exceptions exist under the state seller of travel laws. For example, the California law requires sellers to make full refunds within 30 days after they cancel or are unable to provide the transportation, but the rule does not apply if the seller has already disbursed the money to suppliers and can provide bank records proving it.
Q: If the client is unhappy and decides to sue our agency, could we be liable for the refund?
A: A travel agency is not liable for suppliers' acts or omissions. However, clients and their attorneys sometimes do not understand this absence of liability, and they may try to sue you.
If you used your own disclaimer, such as those at www.pestronk.com/free, it could help you win such suits. The disclaimers state that you are not liable for suppliers' acts or omissions or for destination dangers.
Q: If the supplier goes out of business, as I suspect many are going to do, would your advice change?
A: It would not change unless the plaintiff could prove that you knew or should have known of a supplier's financial weakness when you made the sale.