copyright © 2008 by delmar learning. all rights reserved. hotel, restaurant, and travel law: a...

COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED.

Hotel, Restaurant, and Travel Law:A Preventive Approach, Seventh Edition

Chapter 13Travel Agents and Airlines—Rights and Liabilities


Introduction

The American travel industry originally catered to three categories of travelers:

Wealthy

Business people

Government officials


Introduction (continued)

Travel industry has grown to serve more people

Has become more complex

Problems have also grown



Travel agents do not just sell tickets

They also dispense travel information

Offer advice on all aspects of a trip



Travelers are very aware that they may be entitled to compensation when their travel plans go awry

Disappointed travelers seek recompense in court via litigation


Makeup of the Travel Industry

Generally comprised of four groups:

Suppliers of travel services

Travel wholesalers

Travel agents

Travelers


Agency Law

Issues arise whether the travel agent is a legal representative of the supplier of travel services or a legal representative of the traveler

Sometimes they are representative of the traveler and sometimes the representative of the travel supplier


Agency Law (continued)

Outcome of a case is often determined by whether the travel agent acted as the agent of the traveler or of the supplier

Agency is a relationship in which one person acts for or represents another based on authority voluntarily given by that other person



Principal is the person who authorizes someone to act on their behalf

Agent is the person so authorized, the one who represents or acts for the principal consistent with the principal’s direction



Classic example is employer (principal)/ employee (agent)

Principal is legally bound by the agent’s act and agent is not

If a travel agent acts as an agent for an airline, the airline is required to provide air transportation



When an agent acts outside of delegated authority, the agent may be liable for fraud

When a travel agent acts as an agent for a tour operator when selling a trip, the agent must inform the client of the tour operator’s identity



Agency relationship must be distinguished from that of independent contractor

Independent contractors are people who contract to do work for someone else, but are engaged in an independent business for themselves



Independent contractors Furnish their own supplies and

equipment

Pay their own expenses

Set their own hours of work

Paid fees or compensation, not a salary


Tariffs Rule or condition of air travel that binds the

airline and passengers

Cover such items as: Limitations on the airline’s liability for damaged

baggage Procedures for filing a claim Rules for reservations and check-in times Limits on the airline’s liability for schedule

changes and flight delays Personal injury liability limitations


Tariffs (continued)

Applicable agency is the Department of Transportation

Some tariffs contain one-sided language favoring airlines

Copies of tariffs are available upon request at airports

Conclusively and exclusively govern rights and liabilities between airline and traveler


Remedies for Small Damages

Small Claims Court Forum that encourages people to act as

their own advocate

Class Action Suits All people who have suffered losses from

same cause jointly sue a defendant


Rights of the Traveler

When travel plans do not turn out as represented and purchased, the law is quite supportive of the traveler and provides a remedy in many circumstances


Baggage Claim—Domestic and International

When travelers hand their baggage to an airline, they are entering into a contract with the airline

The contract binds the airline to deliver the baggage to its destination and return it to the traveler upon arrival


Baggage Claim—Domestic and International (continued)

Failure to deliver baggage = breach of contract

Because of frequency of lost or delayed baggage, tariffs protect the airline from unlimited liability


International Flights

Until 2003, international flights were covered by the Warsaw Convention

International treaty that sets limits of liability for lost, stolen, damaged, or misdelivered baggage


International Flights (continued)

Under convention, liability for checked luggage is $9.07/pound up to 44 pounds (approximately $400)

Passenger is informed of limitation on airline ticket


International Flights (continued)

In exchange for limited liability, the airline is presumed to be responsible when luggage is missing

Airline can rebut this presumption if it can show that it took all possible precautions to avoid loss

Passengers have the option to purchase insurance to cover loss in excess of the Convention’s maximum


Rights of Airline Captains Passengers are confined in the

aircraft for duration of the trip

If someone seeks to jeopardize the safety of the passengers, calling the police is not an option

Law allows pilots to remove a ticketed passenger prior to takeoff


Overbooking Many people make airline reservations and

do not appear for the flight

Problems arise when there are fewer no-shows than expected

The airline will bump some passengers

The airline is well-advised to assist the customer in arranging alternate travel plans


Rights of Would-Be Passengers

Involuntarily bumped travelers may be entitled to damages for breach of contract

If the carrier fails to assist a traveler in making alternate plans, punitive damages may be awarded


Priority Rules for Seating When overbooking occurs, law

specifies how to determine who will be denied seating

Airlines must first ask for volunteers

Airline must apply its priority rules, which are developed and filed with the Department of Transportation


Overbooking on International Flights

Governed by Warsaw Convention

Permits a maximum recovery of $400


Punitive Damages on International Flights

Passengers bumped from international flights are not entitled to punitive damages

Although protected from liability, the airline is well-advised to assist its customers in arranging alternate travel plans


Additional Legal Issues Involving Airlines

Lack of documentation for international travel

Wrongful rejection of identification documentation

Wrong destination

Liability for negligence


Liabilities of Travel Agents and Charter Tour Companies

Key role in travel industry

Their influence has decreased significantly with the advent of home computers

Today agents are information specialists on whose expertise much of the traveling public relies


Liability for Own Actions A travel agent is not an ensurer that

all aspects of a trip are safe

The travel agent cannot be reasonably expected to guarantee that a traveler will have a good time or return home without having experienced an adverse adventure or harm


Duty to Investigate Third-Party Suppliers

Agents have a duty to customers to:

Investigate their operations Locate material information about them

that is reasonably available Disclose that information to their

customers


Recommend Travel Insurance

Travel agents are well-advised to suggest travel insurance to their customers

Insurance compensates for cost paid for the vacation if the trip is cancelled for certain reasons


Security Incidents

If travel agents are aware of security issues with a hotel or other service, they should disclose that information to the traveler

Agents are well-advised to inquire about recommended destinations to ensure their relative safety


Liability for Breach of Contract by Third-Party Service Suppliers

When a customer purchases a trip from a travel agent and the trip does not materialize as portrayed, the agent may be liable for breach of contract

If a wholesaler goes bankrupt or out of business, the travel agent will bear the loss


No Liability for Third-Party Suppliers’ Negligence

Travel agents are not liable for the negligence of hotels, resorts, or other service providers


Tour Operators Not liable for negligence of third-party

suppliers

Not liable for suppliers’ contract breaches

Not generally liable when a tour participant is injured at an attraction on tour


Disclaimers by Travel Agent Disclaimer—term in a contract that

attempts to avoid all liability by one party of the contract

Effectiveness is questionable

Include in contract information that defines relationship between all parties


Errors and Omissions Insurance for Travel Agents

Covers the loss of the agent when an error is made

Minimizes for the agent the financial effects of errors made

Business and reputation will suffer with each lawsuit, and the cost of insurance will escalate


Credit Card Fraud

Many airline tickets are sold by phone and Internet

Ample opportunity for credit card fraud

Travel agents must be vigilant


Rental Cars

Important component of travel industry

Presents potential problems for travelers and rental companies


Overbooking

Company may be subject to fine in some states

Most rental companies will pay the difference if a traveler has to rent at a higher price from another company


Accidents in Rental Cars Questions arise as to whether a rental

company is liable to people injured

Generally not liable

Negligent entrustment—providing a product for use to another person and knowing that person is likely to use it in a dangerous manner


Rental of a Car Known to Be Defective

Rental company can be liable if it knowingly rents a vehicle with mechanical problems


Unauthorized Drivers

Authorized drivers are the lessee and anyone else the rental company approves in writing

Everyone else is an unauthorized driver Includes valets


Age Discrimination with Car Rentals

Law in some states allows rental companies to refuse to rent to people under 25

Other states prevent companies from refusing to rent to people who are at least 18, provided insurance coverage is available

copyright © 2008 by delmar learning. all rights reserved. hotel, restaurant, and travel law: a...

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