Chapter 15 The Travel Industry. Copyright © 2007 by Nelson, a division of Thomson Canada Limited 2...

Chapter 15 The Travel Industry

Copyright © 2007 by Nelson, a division of Copyright © 2007 by Nelson, a division of Thomson Canada LimitedThomson Canada Limited

22

Summary of Objectives

To examine international, federal, To examine international, federal, provincial and territorial provincial and territorial regulationsregulations

To define agency and the duties To define agency and the duties of each party in an agency of each party in an agency relationshiprelationship


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International Government Regulation International regulations includeInternational regulations include

• The Warsaw Convention 1929The Warsaw Convention 1929

• The Chicago Convention 1944The Chicago Convention 1944

• The Bermuda Convention 1946The Bermuda Convention 1946

• The Hague Protocol 1955The Hague Protocol 1955


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Federal Regulation

Federal regulations include the following Federal regulations include the following statutes:statutes:

• Carriage By Air ActCarriage By Air Act

• Aeronautics ActAeronautics Act

• National Transportation ActNational Transportation Act

• Immigration ActImmigration Act

• Competition ActCompetition Act

The Canadian Tourism Commission creates The Canadian Tourism Commission creates policy and partners with the private sector.policy and partners with the private sector.


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Actual and Apparent Authority of an Agent The principal authorizes the agent to The principal authorizes the agent to

contract with a consumer on the contract with a consumer on the principal’s behalf.principal’s behalf.

A contract negotiated outside the scope A contract negotiated outside the scope of the authority of the agent will not of the authority of the agent will not bind the principal.bind the principal.

If the agent is acting within the If the agent is acting within the apparent and expected scope of apparent and expected scope of authority, the consumer is not required authority, the consumer is not required to ask if the agent has actual authority to ask if the agent has actual authority to act.to act.


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Principal-Agent Relationship An agency relationship can be An agency relationship can be

created created

• by contractby contract

• by ratificationby ratification

• by estoppelby estoppel

• by necessityby necessity


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Employee and Independent Agent The agency relationship can be The agency relationship can be

created between a principal and created between a principal and an employee or between a an employee or between a principal and an independent principal and an independent agent.agent.

In general, a principal is vicariously In general, a principal is vicariously liable only for acts occurring in the liable only for acts occurring in the course of employment by an course of employment by an employee.employee.


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Duties of Agent to Principal

Conduct expected from an agent by Conduct expected from an agent by a principal includes the following:a principal includes the following:

• ObedienceObedience

• CompetenceCompetence

o For example, the advice of travel For example, the advice of travel agents has the force of professional agents has the force of professional opinion and consumers are entitled to opinion and consumers are entitled to rely on itrely on it


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Duties of Agent to Principal 2

The personal performance aspect usually The personal performance aspect usually required in an agency agreement may required in an agency agreement may restrict delegation of duties.restrict delegation of duties.

The principal can expect the agent to act The principal can expect the agent to act with honesty toward the public – in cases of with honesty toward the public – in cases of fraudulent misrepresentation the consumer fraudulent misrepresentation the consumer can sue the principal.can sue the principal.

The principal can expect the agent to act The principal can expect the agent to act with good faith since a high degree of trust with good faith since a high degree of trust and professionalism is required of all agents.and professionalism is required of all agents.


1010

Duties of Principal to Agent There is a competence and good There is a competence and good

faith requirement expected of the faith requirement expected of the principal.principal.

The agent can expect payment of The agent can expect payment of commissions earned and commissions earned and reimbursement of costs incurred.reimbursement of costs incurred.


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Liability of Agent and Principal Agents are protected from default Agents are protected from default

by a principal upon duly informing by a principal upon duly informing the consumer that the the consumer that the relationship is one of agency.relationship is one of agency.

However, an agent who leads the However, an agent who leads the consumer to believe he or she is consumer to believe he or she is the principal may be liable to the the principal may be liable to the consumer.consumer.


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Duty of Care

The travel agent has a duty of care to The travel agent has a duty of care to the consumer:the consumer:

• To provide complete and accurate To provide complete and accurate informationinformation

• To ensure all aspects of the tour will To ensure all aspects of the tour will satisfy a reasonable personsatisfy a reasonable person

Travel agents and wholesalers failing in Travel agents and wholesalers failing in these duties may be liable for these duties may be liable for

• breach of contractbreach of contract

• breach of duty of care in negligencebreach of duty of care in negligence


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Vicarious Liability

If a travel agent knows or should If a travel agent knows or should have known of the questionable have known of the questionable service reputation of a tour service reputation of a tour operator, the agent can be found operator, the agent can be found to be vicariously liable to the to be vicariously liable to the consumer.consumer.


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Mental Distress

The plaintiff must prove the The plaintiff must prove the parties to the contract parties to the contract contemplated the shock, contemplated the shock, disappointment and annoyance disappointment and annoyance that a breach of duty of care that a breach of duty of care might cause.might cause.


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Verbal Contracts

Contracts arranged verbally are very Contracts arranged verbally are very common in the travel industry.common in the travel industry.

The plaintiff’s burden of proof is the The plaintiff’s burden of proof is the balance of probabilities.balance of probabilities.

Courts tend to rely on the accuracy Courts tend to rely on the accuracy of the traveller’s memory, and to of the traveller’s memory, and to find the agent to be honest but find the agent to be honest but mistaken.mistaken.


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Disclaimer

A disclaimer is a statement on a A disclaimer is a statement on a contract, travel brochure or ticket.contract, travel brochure or ticket.

It attempts to limit the liability of It attempts to limit the liability of the person or company relying on it.the person or company relying on it.

It must be clearly written.It must be clearly written.

It must be brought to the attention It must be brought to the attention of the consumer.of the consumer.


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Court Actions

Most travel litigation is heard in Most travel litigation is heard in small claims court.small claims court.

Judges play a more inquisitorial Judges play a more inquisitorial role since the parties are role since the parties are generally unrepresented by generally unrepresented by lawyers.lawyers.


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Insurance

In the past decade, there has In the past decade, there has been an increase of about 30 been an increase of about 30 percent of claims against travel percent of claims against travel agents.agents.

Agents should purchase errors Agents should purchase errors and omissions insurance.and omissions insurance.


1919

Other Legal Rights

Other legal rights often being Other legal rights often being litigated includelitigated include

• refunds of ticketsrefunds of tickets

• baggage claimsbaggage claims

• the rights of travellers with the rights of travellers with disabilitiesdisabilities

• the right to cancel transportationthe right to cancel transportation


2020

Other Legal Rights 2 The right to refuse or eject The right to refuse or eject

troublesome travellerstroublesome travellers

The right to refuse illegal ticket The right to refuse illegal ticket holdersholders

The right to refuse petsThe right to refuse pets


2121

Trust Money

The use of customer funds received by The use of customer funds received by travel agents is circumscribed to the travel agents is circumscribed to the following situations:following situations:

• The purchase of the travel service the The purchase of the travel service the customer has contracted forcustomer has contracted for

• Reimbursement of funds to the Reimbursement of funds to the customercustomer

• If and when it is earned, the payment of If and when it is earned, the payment of a commission to the agenta commission to the agent


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Provincial or Territorial Travel Acts This legislation protects consumers This legislation protects consumers

from poorly managed operations and from poorly managed operations and unscrupulous agents and operatorsunscrupulous agents and operators

The statutes require the registration of The statutes require the registration of agents and the use of trust accounts agents and the use of trust accounts by agentsby agents

The Travel Acts have created The Travel Acts have created compensation funds for customers compensation funds for customers suffering losses because of the suffering losses because of the conduct of agents or operatorsconduct of agents or operators

Chapter 15 The Travel Industry. Copyright © 2007 by Nelson, a division of Thomson Canada Limited 2...

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