How to assist clients while complying with legal obligations
Travel Advisories being issued by multiple governments, ships being refused entry into ports and change fee waivers have become everyday news because of COVID-19 (coronavirus). Consequently, changes of heart and growing concerns on the part of travellers have become a part of travel professionals’ everyday life, as well. During such times both travel suppliers and travel advisors need to be mindful of what they can do to assist their clients and, at the same time, comply with their legal obligations.
Because of the sense of loyalty on the part of the advisor and sense of crisis on the part of the client, it is understandable that the advisor will want to assure the client that all will be well. It is, however, important that advisors only offer the advice that they are qualified and obliged to provide. Suppliers of travel services will need to rely on their terms and conditions, including details of what amounts are non-refundable, cancellation provisions and force majeure clauses, when it comes to what a traveller is or is not entitled to do in the face of COVID-19 (coronavirus).
The main difference between suppliers and advisors is that suppliers are obliged to make a decision, based on the available information, as to whether or not they will supply the travel service, whereas advisors
are obliged to advise their clients that they must use the available information to make their own decision as to whether to purchase/use the travel services.
The error that we see most often on the part of the advisor is making the decision on behalf of the client, for example, by assuring the client that there is no indication that the destination to which they are going is affected.
The error on the part of the travel supplier is with respect to their terms and conditions. Specifically, a failure to properly set out the terms and charges with respect to cancellation and refunds and/or not including a force majeure clause. All of these errors can have a significant cost, to the individual advisor and/or the companies, but are straightforward to avoid.
The Regulation under the Ontario Travel Industry Act sets out the obligations with respect to “representations relating to the provision of travel services.” Section 34 of the Regulation sets out the information to be included in all forms of “written” representation, including parts (1) 4. “Cancellation terms and any cancellation charges” and 6. “The refund policy, including any penalty provisions.” Section 36 of the Regulation deals with what an agent must do before taking payment for the travel services, paragraph (a) of which states: “bring to the customer’s attention any conditions related to the purchase of travel services that the travel agent has reason to believe may affect the customer’s decision to purchase;” paragraph (c) of which states: “explain to the customer any requirements or limitations relating to transfer or cancellation of the travel services including: (i) the range of penalties or other costs associated with transfer or cancellation, and (ii) any non-refundable payments to be made by the customer;” paragraph (f), which states: “refer to other conditions, if any, that relate to the transaction and to the travel services, and advise the customer where those conditions may be reviewed”; and paragraph (g), which states: “advise the customer that the travel agent is required to answer any questions the customer may have arising from the information provided under clauses (a) to (f) or from a representation.”
Lastly, section 37 of the Regulation deals with an agent’s obligation to advise the customer of changes with respect to the travel services after the sale. It states: “If, after a customer has purchased travel services, the registrant becomes aware of a change to any matter that is referred to in a representation and that, if known, might have affected the customer’s decision to purchase, the registrant shall promptly advise the customer of the change.”
Interpreting these three sections, we know that: (a) before entering into an agreement for travel services and taking payment from a client, any “conditions related to the purchase of travel services” that it is believed would affect the customer’s decision to purchase those services must be brought to the customer’s attention; and (b) after a customer has purchased travel services, if there is any awareness of “a change to any matter that is referred to in a representation,” that if known might have affected the customer’s decision to purchase, that change must be brought to the attention of the customer. Although the requirement to bring “conditions” related to the travel services to the customer’s attention is much broader before the sale, it should be noted that a representation could be written or oral. Avoiding any oral representations is always a best practice because proving exactly what was said after the fact is always difficult. It also makes it much easier to determine what information must be conveyed to a traveller if any changes occur if only written representations were made. For example, it is easy to refer to a written file to determine what class of airline ticket or star rating of a hotel was represented as part of vacation package, but almost impossible to know what was said about the health conditions of a particular destination.
Most contact from clients today will be in relation to
COVID-19 (coronavirus) and its effect on their travel plans. When contacted by a client, the advisor should simply direct the customer to the sources of information that the client can use to make a decision.
These include the appropriate local and destination government websites and the World Health Organization website.
This is the only advice that any advisor is competent/qualified to provide to any client regarding the virus. To do anything more than this, for example give an opinion on whether COVID-19 (coronavirus) is presently in a particular destination or is likely to go there, would be outside the knowledge of the advisor. It could, therefore, lead to a finding of legal liability for both the advisor and the company.
In addition to relying on the terms and conditions dealing with charges for cancellation and refunds, when dealing with circumstances such as COVID-19 (coronavirus), travel suppliers will need to rely on a force majeure clause.
Force Majeure means any event or series of events beyond the person’s control that prevents or delays complying with an obligation under a contract. Such clauses typically include an act of God, fire, flood, lightning, abnormal inclement weather, natural disaster, explosion, war, riot, civil unrest, terrorism, interruption or failure of power supplies, etc.
In order to rely on such a clause, the travel supplier would have to prove that the event had occurred and that it was the event that caused its inability to perform its part of the contract. Most of these clauses require the person who cannot perform to notify the other party and advise as to when it is believed performance can take place. Some of these clauses also give the right to the party relying on the clause to simply cancel the contract or at least relieve it from carrying out its obligations under the contract. If they already have a well written force majeure clause and clear terms regarding cancellation and refunds, travel suppliers will be able to respond to any claims by clients for a return of payments covered by these clauses. Without them, the obligation to provide the services contracted for will remain and not doing so will at the very least require repayment.
The importance of properly drafted terms and conditions that travel suppliers can rely on where COVID-19 (coronavirus) is concerned highlights the obligation of the travel advisor to make sure that those terms and conditions are brought to the attention of the traveller before any payment is taken from the customer, as required by section 36 of the Ontario Regulation. A failure to comply with this obligation would be expensive enough in the context of an individual or small number booking, however, it could be catastrophic when dealing with significant-sized group bookings. It is for this reason, that the sales process should follow a mandated format, complying with the requirements of this section of the Regulation.
Heifetz, Crozier, Law is a Toronto law firm that has for years represented all aspects of the Canadian travel industry. The lawyers at HCL also maintain a non-travel practice, covering litigation, real estate, Wills, corporate/commercial matters, etc. To contact HCL, e-mail firstname.lastname@example.org.