Coronavirus: The law relating to agents

Travlaw’s Matt Gatenby clarifies agents’ legal responsibilities

It doesn’t take a lawyer to tell you these are troubling times. The issues the Covid-19 virus has brought to the fore are many and varied and affect all types of travel companies.

There are different views on the issues, a lot of which overlap, but also significant areas of difference.

We’ve seen Abta take a significantly proactive stance and I recommend everyone watch the Travel Weekly interview with Mark Tanzer of March 26 and the follow up videos from Mark.

I also recommend a counter-point piece by industry veteran Kane Pirie.

There is a lot of focus on the impacts the Package Travel Regulations 2018 have on tour operators, but the following is intended as a summary for agents.

What’s an agent to do?

The law of agency is not a topic often given much coverage except when something goes wrong.

Travel agents are almost universally professionals who know what they are doing when it comes to selling travel services and holidays so there is usually little need to get into agency law.

However, it is worth revisiting the fundamental basis of agency. In travel law circles there has been a longstanding academic debate about exactly who a travel agent is an agent for.

It depends on the circumstances, but the general thinking is that when a customer enters a store or accesses a website, the travel agent is an agent for the customer – especially when the customer is taking a “show me what you have that is winter sun” approach.

The agent may have various sources they look to and the process is refined in discussion. However, at some point there is a ‘switch’ where the travel agent is no longer agent for the customer, but rather agent for a principal holiday provider (who we can refer to as ‘the principal’).

The agent then puts the customer and Principal into a contract. This basic process is what happens thousands and thousands of times a day in physical and online agencies.

The travel agent is subject to the usual rules of agency. This includes being the contact point between principal and customer, and being paid a commission by the principal in line with the agency agreement and the various financial terms within it.

Changes and cancellations

Whether changes are made by the customer, due to not being able (or not wanting) to travel, or by the principal being ‘constrained’ to change or cancel, it is often left to the agent as the ‘middle person’ to communicate back and forth.

Let’s take as an example the situation now where holidays are being affected by Covid-19.

It is important to remember that the overall instructions on what to do are set by the principal.

That leaves agents in the front line. From speaking to many agency clients in recent weeks it is clear heroic efforts are going on to ensure customers are looked after.

However, the legal obligations on an agent are largely restricted to taking instructions from the principal.

Going above and beyond in terms of service is not something anyone is going to discourage, but legally you need to be careful to make sure you do not step outside your instructions – the actions of an agent do still bind the principal, so be mindful of that.

If you go outside of what the principal has set out you should do, it could be you who is left carrying the can.

What is important to agents is consistency of instructions and advice from principals – so if you don’t believe you have that, you are entitled to seek it, and to push hard to do so.

One important point to remember is that as an agent you should not be the person or company being sued if customer patience runs out, neither should you be the ones on the receiving end of chargebacks or similar. All of that liability sits with the principal.

But you should certainly make sure you notify the principal of any developments you become aware of to protect your own position.

There are other situations to bear in mind. If you are an agent who has dynamically packaged services, all the decisions fall to you.

If you are an agent for a travel service that is not a package, the same rules apply in terms of taking instructions from the principal, but the rules around packages will not apply.

Talking about packages

There is, to put it mildly, a lot of disquiet about the effects of the Package Travel Regulations at the moment.

Whilst the regulations, in their previous and current form, largely said the same when it comes to refunds to customers, there has never been an application of them to a situation such as we have with Covid-19.

The rights and wrongs of the positions currently being taken and whether the regulations are fit for purpose are arguments that are going to run until there is clarity from the UK government.

We have seen countries such as Belgium, Italy and France enact legislation which relaxes the current position, so that is certainly possible.

For now travel agents need to keep on doing the fine work they have always done. You are very much in the firing line, but this will end.

Matt Gatenby is a senior partner at Travlaw

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