The Legal Relationship between Agent and Client

If you book travel for clients—or host independent contractors who do—you probably have had to read more fine print and had to go to bat for your clients more in the past six months than in the past six years.

In addition to performing miracles under time pressure and a voluminous workload, you probably also had to learn about some legal components of the business on the fly. All of this may have caused you to reassess some of your business processes. However, before attempting to change your practices, especially in this period of uncertainty, you should seek the advice of a lawyer who specializes in travel law.

We also recommend attending the free power session by Sheila Folk and J. Mark Staley, The Ins and Outs of Bringing on Independent Contractors, on November 23 at 11:30 am (EST), when they will walk you through the must-haves for your IC agreements.

After consulting with your attorney, you will gain an understanding of the legal principles courts tend to follow, which will help clarify ways in which a travel advisor can promote a positive and long-lasting relationship with clients and help minimize exposure to lawsuits.
For example, one such legal principle is the significance of the relationship between an agent and the client (known as the principal).

An agent is a person legally entitled to act on the principal’s behalf and to enter into agreements with third parties on the principal’s behalf. A principal is the person or entity represented by the agent. A fiduciary relationship, often imposed in a true agent-principal relationship, is a special legal relationship of trust requiring that the agent exercise a high degree of care and good faith in acting on behalf of the principal. In this relationship, each person extends trust and confidence in the other and must exercise a corresponding degree of fairness and good faith.

Even if the agent and client both act in good faith, sometimes things go wrong in the agent-client relationship. As such, consider how you can limit or prevent liability resulting from future bookings. Again, seek an attorney’s advice.

Chun Wright, Esq., Law Office of Chun T. Wright PLLC, offered the following practical tips you can discuss with your lawyer.

Tips to Minimize Risk

  • Align yourself early with your clients and stay in communication with them. Always promptly answer or return telephone calls from all customers, but especially the disappointed ones.
  • Ensure that your staff understands how to escalate issues within your company and that staff members escalate those issues to you or another specific point person within your company early.
  • Use a disclosure statement identifying the third-party travel suppliers and providing limits of exposure to your commission and any service fee charged. Advise that you are not responsible for the actions or inactions of your independent suppliers, including for their financial default or failure to deliver services. Disclosure of the agency/principal relationship (signed by the consumer) has been very useful in certain jurisdictions to relieve the agency of liability when a supplier goes bankrupt, especially if the consumer insists on a particular vendor or destination that causes you concern.
  • Create a complete and documented file, including all relevant correspondence with vendors and clients.
  • Use a global distribution system (GDS) that automatically provides you with information about visa requirements, advisories, travel warnings, and public announcements regarding destinations. Before booking clients, be sure to consult sources—like the U.S. Department of State or the World Health Organization—for the latest global travel updates for individual countries. Provide those websites to your clients and inform them that it ultimately is their responsibility to stay informed. Encourage travelers to enroll their trip with the U.S. State Department’s Smart Traveler Enrollment Program (STEP)
  • Offer insurance with every package, cruise, tour, or airline ticket whenever possible and encourage travelers to obtain “cancel for any reason” (CFAR) coverage. Offer insurance by an independent provider, not the tour operator’s or cruise line’s provider. Bundle the cost of the insurance into the price and strongly recommend that all your clients buy it. Make it clear, however, that you are not an insurer and cannot answer coverage questions—those must be directed to the insurance carrier.
  • Read the trade press. Keep abreast of daily news developments.
  • Be sure your agency has errors and omissions insurance that covers mistakes made in arranging travel.
  • Have clients sign a liability waiver to limit your legal exposure.
  • Ask independent contractors associated with your company to sign a contract with you. To protect your agency, be sure to have an indemnity provision in which ICs are responsible for indemnifying your agency (i.e., will pay your legal defense costs and any damages that you are ordered by a court to pay) if they have handled the entire booking themselves.

This is only a sampling of the issues you should be reviewing right now while you have the time. Shoring up your agency in this way will give you peace of mind for your (hopefully) not-too-distant busy future.