1. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Hotel, Restaurant, and Travel Law: A Preventive Approach, Seventh Edition Chapter 13 Travel Agents and Airlines Rights and Liabilities

2. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Introduction The American travel industry originally catered to three categories of travelers: Wealthy Business people Government officials

3. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Introduction (continued) Travel industry has grown to serve more people Has become more complex Problems have also grown

4. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Introduction (continued) Travel agents do not just sell tickets They also dispense travel information Offer advice on all aspects of a trip

5. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Introduction (continued) 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

6. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Makeup of the Travel Industry Generally comprised of four groups: Suppliers of travel services Travel wholesalers Travel agents Travelers

7. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

8. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

9. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Agency Law (continued) 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 principals direction

10. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Agency Law (continued) Classic example is employer (principal)/ employee (agent) Principal is legally bound by the agents act and agent is not If a travel agent acts as an agent for an airline, the airline is required to provide air transportation

11. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Agency Law (continued) 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 operators identity

12. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Agency Law (continued) 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

13. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Agency Law (continued) 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

14. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Tariffs Rule or condition of air travel that binds the airline and passengers Cover such items as: Limitations on the airlines liability for damaged baggage Procedures for filing a claim Rules for reservations and check-in times Limits on the airlines liability for schedule changes and flight delays Personal injury liability limitations

15. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

16. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

17. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

18. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Baggage ClaimDomestic 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

19. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Baggage ClaimDomestic 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

20. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

21. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

22. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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 Conventions maximum

23. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

24. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

25. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

26. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

27. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Overbooking on International Flights Governed by Warsaw Convention Permits a maximum recovery of $400

28. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

29. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Additional Legal Issues Involving Airlines Lack of documentation for international travel Wrongful rejection of identification documentation Wrong destination Liability for negligence

30. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

31. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

32. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

33. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

34. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

35. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

36. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. No Liability for Third-Party Suppliers Negligence Travel agents are not liable for the negligence of hotels, resorts, or other service providers

37. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

38. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Disclaimers by Travel Agent Disclaimerterm 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

39. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

40. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Credit Card Fraud Many airline tickets are sold by phone and Internet Ample opportunity for credit card fraud Travel agents must be vigilant

41. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Rental Cars Important component of travel industry Presents potential problems for travelers and rental companies

42. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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

43. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Accidents in Rental Cars Questions arise as to whether a rental company is liable to people injured Generally not liable Negligent entrustmentproviding a product for use to another person and knowing that person is likely to use it in a dangerous manner

44. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Rental of a Car Known to Be Defective Rental company can be liable if it knowingly rents a vehicle with mechanical problems

45. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Unauthorized Drivers Authorized drivers are the lessee and anyone else the rental company approves in writing Everyone else is an unauthorized driver Includes valets

46. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. 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