EMITT/TUREB
Congress at TUYAP Exhibition Center
4 April 2003
Consumer Rights of Tourists at the International Level and the Role of Tourist Guides
By John J Downes
Reader in International Travel Law,
University of Abertay Dundee
President of IFTTA
Introduction

“Ay, now I am in Arden; the more fool I. When I was at home I was in a better place; but travellers must be content”. But travellers have not been so content. There has been a steady rise in litigation in North America, Europe and Australasia in recent decades and South Africa has been experiencing it too. In the USA, Thomas Dickerson, New York judge and Travel Law writer, has written numerous articles with titles such as “Travel Abroad, Sue at Home”, “Going to a Convention or Reunion? Don’t Forget to Pack a Law Suit”, “Taking Your Travel Agent on a Trip to the Courthouse”. In Germany, travellers are provided with a leaflet entitled “Your Rights Go with You on Holiday”. Travel agents and tour operators might think that legislators and judges had it in for them; and they might be right.

In 1983, at the First International Congress on the Legal Aspects of Travel and Tourism, Dr Jose Fosman, my predecessor as President of IFTTA, gave a paper entitled ‘Don’t shoot the tour operator’. The gist of Dr Fosman’s paper was that consumer protectionism was getting out of hand and that it would become self-defeating in that it would lead to travel agents giving a much more reserved service, reluctant to say anything or give any advice to the consumer for fear that what they said would be taken down and used in evidence against them. The increased liability would inevitably lead to higher costs for the tour operator that, in turn, would be passed on to the consumer. Dr Fosman cited several recent cases in which the courts took a very pro-consumer stance in travel cases.

In England, in 1968, there was a landmark case, now followed by courts throughout the English-speaking world, that of Jarvis v Swan Tours in which the eminent English judge declared a holiday to be a ‘contract of enjoyment’ which if, as in that case, frustrated could lead to an award of damages exceeding the price paid for the holiday. In that particular case damages were awarded at twice the price paid for the holiday even though Mr Jarvis had no complaints about the flight on Swiss Air (the price of which, had he booked it independently, would have exceeded the price he paid for his 14 day holiday). Neither had he complained about the food. But he did not have an ‘enjoyable’ holiday; it had not met his expectations. Lord Denning acknowledged that a holiday could be a fantasy in the mind of the person who books it. The Australian courts adopted this case in 1982. It was also followed by legislation to “tighten the reins on travel agents and tour operators in Australia”.

In a recent South African case a consumer went for a diving holiday on an island off Mozambique. He had a good holiday, but because the diving instructor and equipment was not up to par, he was awarded damages equivalent to the cost of the whole holiday, not just the diving component.

In Germany, a law had been passed imposing a degree of strict liability on the tour operator when things went wrong. This was followed by the famous (infamous?) Frankfurt List that set out in detail the levels of compensation the disgruntled holidaymaker was entitled to; for example, if he didn’t get a sea view at his hotel, or his food was not sufficiently hot. In the USA a court awarded damages for distress to a man that suffered ‘a nervous condition’ as a result of being provided with arrangements substantially different from those booked. In Canada, damages were awarded for the distress caused to two elderly consumers, when one of their dogs, Bon Bon, which the airline insisted had to travel with the cargo, was killed by fumes and the other, Pistachio, was injured and had to be nursed back to health. In the Netherlands, damages were awarded when the tour operator failed to inform a customer that a tour included 21 visually handicapped people. The Frankfurt District Court awarded damages to a German couple for the distress they suffered on a Caribbean cruise on which 500 of the 600 consumers were members of the Swiss Yodelling Association who entertained themselves by practising their art throughout the trip. In a Scottish case, damages were awarded to a bride for her loss of pleasure in not having her wedding photographs. In an English case, the court would not permit the defending tour operator’s counsel to cross-examine a plaintiff complaining about her holiday because it would be unfair because she was ‘old’.

It was not just the courts that were giving the industry cause for concern. Legislatures too were turning their attention to the travel sector. Measures imposing stricter liability on tour operators for the component services of package holidays were hugely popular with consumers. Ontario, Australia, Germany, Japan, enacted such legislation. Argentina, Belgium, Benin, Cameroon, Italy, Taiwan and Togo introduced measures to implement the International Travel Contracts Convention. The Spanish Civil code imposed liability on tour operators for the acts and omissions of its suppliers and in France the tour operator was made liable for ‘proper performance’ of the contract.

Confused Roles

The legal distinction between a tour operator and a travel agent is often unclear in many jurisdictions. This is the case, for example in France, in Saudi Arabia, in Lesotho and Portugal. Even in the landmark case of Jarvis v Swan Tours, the judge uses the terms interchangeably.

Recent cases South Africa, particularly where adjudicated at small claims level, show that there is confusion as to these roles in the minds of judges and advocates.

The legal distinction was unclear in Italian Law until recently. Tour operators sought to avoid their liabilities by arguing that they were merely intermediaries between the consumer and the provider of the services, and the legal obligations of the travel agent were merely considered to be those providing expert advice and a permanent contract of mandate to act on behalf of the client. The legal position was clarified by the Tribunale di Roma, which held that the tour operator was not merely an intermediary but binds himself to provide transport, hotel and other tourist services. Article 1228 of the Civil Code provides that the supplier of services is liable for defects in performance of the contract notwithstanding the use that may have been made of independent contractors.

Travel agents and tour operators are subject to the general Commercial Law and/or Civil Code of their national state. However, it is possible to discern some common rules that apply. I have set these out below. It should be noted that the terminology I have used is that of the Common Law systems but equivalents can be found in the Civilian Legal Tradition. Turkey adopted/adapted that system for its Commercial Law.

The Legal Status of the Tour Operator

Tour operators provide an organized travel contract, that is, a package of travel and accommodation and other related services for a single all-inclusive price, which is generally lower than the consumer could purchase by booking the components separately. The tour operator carries a stock of travel and accommodation that is sold to the consumer, sometimes directly, but most frequently, through a travel agent. The holiday contract is between the tour operator and the client.

In many countries the vast majority of holidaymakers opt for an organized holiday contract. The reasons for this preference are clear:

• the holidaymaker may not be familiar with the country of destination, still less with the quality and alternatives of accommodation available;
• he is in weak bargaining position, particularly where the country visited has a different language, different currency, different legal protections and perhaps obstacles to freedom of movement to that of his country of residence;
• the tour operator can usually provide the package at a price considerably lower than the client can obtain by booking the components separately.

  It is for these reasons that most holidaymakers rely upon the skill and judgement of the tour operator and opt for the security of a package holiday.

  The tour operator is an organizer of services provided by others. Most tour operators do not own the carrier or the hotel used in the package holiday. The holidaymaker relies upon the skill and judgement of the tour operator in selecting component carriers, hoteliers, representatives and guides, however. The question arises as to the extent of the tour

  operator’s liability for the breaches of contract or negligence by the carrier, hotelier or other third party. Two views are generally expressed:
   

• that the tour operator is only liable when a claim arises from failure to provide the services indicated in the brochure. He is not liable for the acts or omissions of third parties (e.g. the carrier/the hotelier) over which he has no control unless the client has established that the tour operator failed to exercise due skill and care to select a competent carrier/hotelier etc.
   
• that the contract is between the client and the tour operator and the tour operator is liable whenever there has been a defective performance of any part of the contract.

  It is the second view that is now effectively enshrined in the EU Package Travel Directive.

  Where the tour operator has contracted with the hotelier to provide accommodation to his clients, the tour operator must except liability for the hotelier’s negligent provision of that accommodation e.g. where the client is injured due to the safety of the premises.

  In most legal systems in a contract for the supply of a service where the supplier is acting in the course of a business there is an implied term that the supplier will carry out the service with reasonable care and skill.

  What is reasonable skill and care? This was defined in an English case:

  “It is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art”.

  Per McNair J. in Bolam v Friern Hospital Management Committee [1957] 1 WLR 582.

  The tour operator must exercise the care and skill of a competent tour operator.

  The Legal Status of the Travel Agent

  There is no common legal definition of a travel agent but that provided by the International Convention on Travel Contracts (CCV) is useful. Article 1 defines a travel agent or travel intermediary as:

  “. . . a person who habitually or regularly . . . undertakes to provide for [other persons] for a price, either an organized travel contract or one or more separate services rendering possible a journey or sojourn.”

  The EU Package Travel, Package Holidays and Package Tours Directive defines the retailer as:

  “ . . . the person who sells or offers for sale the package put together by the organizer”.

  In most countries the term travel agent is usually applied to a retail business, but in some countries it may be used to refer to a person rather than an organization. This distinction can be important; the application of a term to an individual carries with it a status that is necessary if it is to be considered a profession. Such a move is not always welcome by those in the industry who are concerned that recognition of professional status would impose stricter legal duties towards clients. The consequences might be a more reserved, more cautious and more expensive service to the client. The travel agent interacts with several parties; clients, carriers, hoteliers and, of course, tour operators. The travel agent is the necessary link in promoting particular tours, especially if the tour operator does not operate a travel agency business. The travel agent keeps a stock of the tour operator’s brochures and must be familiar with the holidays available so that he may recommend particular holidays to meet his client’s needs. The travel agent is an intermediary, an agent.

  The definition in the EU Directive does not use the term “occasionally” and the position of the retailer as an intermediary appears to have been retained. The Directive has been criticised for its failure to take into account the dual nature of the retailer’s relationship with the consumer. For most purposes the travel agent acts for the principal – the supplier of services – although agents also act for their clients – the customers – for some purposes. Although that relationship is not expressly recognized in the definition, it is implicitly retained by the provisions of the Directive but it must be stressed that travel agents who put together packages for clients will be considered as organizers rather than retailers.

  Relationship Between The Travel Agent And The Client

  It is not essential, in law, that the term agent is used when entering into a travel contract but in most circumstances the agency is quite apparent (the business is called a travel agency). Nevertheless, it is important to make it clear that they are acting solely as agents for the carrier, hotelier, car hire company, tour operator etc. Some trade associations (e.g. in Belgium and Scandinavia) recommend the adoption of standard clauses in agency contracts in order to protect both the travel agent and the client. They also recommend a “consumerist approach” to such clauses i.e. that they should not be pursued ruthlessly to the detriment of the client. Most of these clauses remind the client that any claim for loss or breach of contract must be made against the tour operator.

  The legal principle of disclosure of agency is an important one; particularly in the sale of tailor-made package travel arrangements. The client may be unaware that there exists a separate entity known as the tour operator. In the USA there have been a number of judicial decisions in which travel agents have been held directly liable to the client because they had failed adequately to inform the client that the retailer was acting solely as agent for the tour operator.

  Bucholz v Sirotkin Travel [1974] 80 Mi 2d 233

  Facts: Bucholz engaged a travel agent to arrange a trip to Las Vegas that included accommodation at the Aladdin Hotel. The clients suffered inconvenience due to a change in departure time and also discovered that reservations had not been made at the hotel and neither had his luggage been sent there.

  Issue: Could the travel agent be held liable in circumstances which the travel agent argued that he was only acting as an agent for the tour operator?

  Held: the court rejected this on the grounds that the client was unaware of the tour operator’s existence.

  The judge held: “whereas here there is no proof of an independent relationship between the travel agent and the wholesaler (tour operator). The travel agent should be considered the agent of the customer . . . . If in using a wholesaler to make the travel arrangements the travel agent acts with the consent, expressed or implied, of the principal (customer), then if reasonable diligence is being used in its selection the travel agent will not be responsible for any dereliction of duty on the part of the wholesaler . . . . If on the other hand the travel agent acts without such consent he will be responsible for any damage sustained as a result of the acts of the wholesaler”.

  Similarly, in the case of Siegal v Council of Long Island Educators Inc. [1973] 75 Mix 2d 750, it was held that “an agent is liable for his acts even though the other party knows that he is acting as agent if the identity of the principal is not disclosed”.

  There are certain circumstances in which the travel agent would be considered to be the agent of the client:

  (i) The travel agent may have undertaken to perform booking services for the client. If he fails to do so, he may be sued by the client.

  (ii) Some travel agents are also tour operators; even small travel agencies may arrange and supply package holidays, in which case the contract is directly between the client and the travel agent.

  (iii) The travel agent may have personally guaranteed the services being provided.

  (iv) The travel agent may have disclosed that he was acting on behalf of a principal but may not have named that principal.

  (v) The travel agent may not have disclosed that he is acting on behalf of the principal.

  Travel agents should draw the attention of their clients to booking and other published conditions applicable to their travel arrangements. Travel agents must also ensure that counter staff carefully study carriers’ conditions of carriage, tour, holiday and travel programmes and brochures so that they are able to impart accurate information to their clients and to sell more efficiently. They should make every effort to ensure that accurate and impartial information is provided to enable their clients to exercise an informed judgement in making their choice.

  The Relationship Between The Tour Operator And Suppliers

  The liability of the tour operator for their suppliers has been the subject of much controversy in the industry in recent years. Tour operators argue that the supplier is an independent contractor over whom they do not exercise control. In some case, however, it is difficult to distinguish whether the supplier is an independent contractor or the tour operator’s agent. The importance of the distinction lies in the different consequences that flow from the different relationships.

  Tour operators have traditionally provided a clause in their brochure indicating:

  “We do not exercise direct control over the day to day running of hotels, airlines, railways and other services relating to your holiday. We therefore are unable to accept liability for any acts or omissions caused by those involved in your holiday arrangements over whom we do not have direct control”.

  However the distinction is decided by consideration of all the circumstances and not merely by reference to the wording of the contract between them. There are three main reasons for the importance of the distinction between an agent and an independent contractor:
   

• Vicarious Liability: the tour operator is vicariously liable for the acts or omissions of agents but not those of independent contractors (except in the EU where the Package Travel Directive applies).
   
• The duty to provide for safety: the tour operator is under a duty to take reasonable care for the personal safety of employees (e.g. representatives) but not for that of the suppliers.
   
• Statutory Obligations: Laws that impose vicarious liability on a principal usually confine that liability to the acts of servants and agents and do not generally impose liability for the acts of independent contractors. However, N.B. the EU Package Travel Directive.

  The Travel Agent And The Hotelier

  To what extent is a travel agent liable for acts and omissions of a hotelier? Generally, a person is not liable for acts and omissions of independent contractors. There are circumstances, however, in which a travel agent would be held liable for the acts and omissions of a hotelier:
   

• where the travel agent authorises the hotelier to do a wrongful act or subsequently ratifies it (e.g. to evict a guest from a hotel without due cause);
   
• where the travel agent has been negligent in selecting the hotelier (e.g. where safety standards are very poor);
   
• where the travel agent has failed to give the hotelier instructions necessary to avoid the wrongs complained of (e.g. failure to pass on details of the special needs of a disabled person).

  These rules are consistent with Turkish Law.

  The rules for determining the extent of the travel agent’s liability are a matter of debate. However, there are factors that a court might take into consideration:

  (1) The extent of control which by agreement the travel agent exercises over the details of work done by the hotelier.

  It could be argued that if a hotelier provided accommodation exclusively to the clients of a particular travel agent, or even predominantly so, the travel agent is in a position to exercise considerable, control and the hotelier is fulfilling the functions of an agent. In practice, however, most hoteliers exercise such independence even from a dominant client that the relationship would fail the “control test”.

  (2) Whether or not the hotelier is engaged on distinct occupation or business.

  Where the travel agent owns the hotel it is obviously part of the same business. Most hoteliers clearly operate an independent and distinct business from the travel agent. The only question that could be raised here is how dependent is the hotelier on that particular travel agent.

  (3) To what extent has the travel agent supervised and given instructions on the conducting of the hotelier’s business?

  The hotelier may contract to provide certain services at the travel agent or client’s request, but in this he has complete freedom of contract. However, where detailed instructions have been given and the breach or fault arises from those instructions the travel agent would be liable.

  (4) The skill required in that particular occupation.

  The travel agent should be able to rely upon the skill and judgement of the hotelier. The travel agent of course must inform himself as to the competence, reputation and desirability of the hotelier and his establishment. Once he has reasonably assured himself of these qualities, he is entitled to assume that the day-to-day activities of the hotel would be managed competently and efficiently (with due regard of course to the standard of hotel). The travel agent must be honest in describing the facilities and attributes of the hotel and its staff, atmosphere, etc.

  (5) Special facilities etc.

  Where the travel agent provides special entertainment or facilities in the hotel which are not the responsibility of the hotelier then the travel agent is liable for any defect in these.

  (6) The duration of the contract between the travel agent and the hotelier.

  A travel agent who has received complaints from dissatisfied clients, which were well founded in the past, cannot be said to be free from liability unless the travel agent could show that he was given reasonable assurances of improvement and that it was reasonable for the travel agent to rely on those assurances.

  (7) Price.

  Obviously, standards will vary according to the category of the hotel, price, location, etc. The client cannot expect the same degree of service or quality of environment in a pension as he would expect in a five star luxury hotel. However, this does not mean that very poor standards or defective performance must be tolerated. It is rather as a general rule that standards must be higher than usual the greater the payment for them.

  In weighing up all of the factors it would appear that in the majority of cases the relationship of travel agent and hotelier is one of principal and independent contractor. Thus, accepting the situations indicated, the travel agent cannot be held liable for the acts or omissions of the hotelier.

  The hotelier’s contract is not to serve but to bring about the required result in his own way and if in doing so he injures the client, he alone is responsible.

  The Travel Agent And The Carrier

  The legal relationship is similar to that of the travel agent and the hotelier. Most carriers are independent contractors from the travel agent. The importance of the distinction between a carrier who is a servant and one who is an independent contractor is the same. The travel agent is vicariously liable for the acts or omissions of servants but not those of independent carriers. A travel agent who provides his own free coach for transporting clients from a city centre to an outlying airport would be vicariously liable if the coach crashed due to the driver’s negligence. A travel agent who books seats on the scheduled city centre airport service for his clients would not be vicariously liable for the negligence of the independent coach company’s employee. The duty to provide for safety is the duty of the travel agent to take reasonable care for the safety of employees but not for the employees of independent contractors. The statutory duties relating to carriage of consumers and their luggage merely impose liability on the carrier and not the travel agent.

  The travel agent is liable for the acts of an independent carrier if he authorizes the carrier to do a wrongful act or subsequently ratifies it. N.B. Ackroyd’s Air Travel Ltd v DPP [1950] 1 All ER 93 (in which a tour operator was prosecuted for contravention of the Civil Aviation Act 1946).

  The travel agent must act with due care in selecting the carrier. Where the travel agent has failed to give adequate instructions to the carrier so that the latter might avoid the acts complained of the travel agent will be liable. A travel agent who has been informed of a physically handicapped person’s special needs and has agreed to make special provision for them but fails to pass on this information to the carrier would be liable to the traveller for any distress or inconvenience suffered by inadequate travel arrangements.

  In applying the same factors that we used to identify the relationship between the travel agent and hotelier, it is clear that most carriers are independent contractors for travel agents. The travel agent has little control over the work done by rail networks, ferry companies or airlines. If the carrier gives exclusive service to a particular travel agent, however, then the travel agent is in a position to exercise control and may be found liable for the acts or omissions of the carrier in some circumstances. However, in practice, most carriers exercise such independence even from a dominant client that the relationship would fail the control test.

  Most carriers used by travel agents are engaged in the distinct business from the travel agent. The work done is specialist work, free from the supervision of the travel agent. The travel agent ought to be able to rely on the skill and judgement of the carrier. He must, of course, inform himself as to the competence, reputation and desirability of the carrier and his establishment. The travel agent who has received well-founded complaints about the carrier in the past would be considered negligent if he continued to employ that carrier without requiring changes. The carrier supplies his own vehicle, vessel or craft and is thus responsible for maintaining it in a safe condition.

  Consumers and tour operators are bound to comply with the relevant conditions and by-laws of the carrier. Most carriers provide tickets that contain or refer to conditions on which the contract of carriage is performed.

  Usually these conditions seek to exclude liability of the loss or injury. These conditions are subject to national legislation governing unfair contract terms (or contrats d’adhesion). The practical effect of the Act has been that insurance to provide for such liability has greatly increased. It is not unlawful for the tour operator, travel agent or carrier to put such disclaimers on the booking form or on tickets but the court will not permit the tour operator, travel agent or carrier to rely on them if they are unreasonable. The tour operator and travel agent usually stress that tickets are issued “strictly as agents for the carrier and not as principal”.

  The unfair contract terms legislation usually does not exclude the following conditions:

   

• “tickets are issued subject to the by-laws of the carrier”.

   

• “the tour operator/travel agent is not liable for loss or injury to the traveller or his luggage caused by the negligence of the carrier”.

   

• “the client must accept reasonable alteration of the time of travel and necessary surcharges”.

  Such conditions would only be excluded if they were considered unfair and unreasonable. A travel agent or tour operator may refuse to refund lost, expired, unendorsed or unused tickets.

  Booking conditions which exclude the travel agent or tour operator from liability for changes in departure time of less than x hours would only be enforceable in so far as they are reasonable. Delays or alterations that result in major changes to the client’s holiday or travel arrangements would render the exclusion clause challengeable under the legislation. The client may have a claim for reasonable hotel expenses, refreshments and other inconvenience compensation. Alternatively, the client may be justified in cancelling the travel arrangements and demanding a refund plus compensation. The tour operator or travel agent in turn can sue the carrier for negligence or for breach of contract.

  Most carriers exclude liability for unpunctuality and in most cases this would be enforced by the courts. The general principle is that in the contracts for carriage by land and by sea there is no obligation to be timeous unless the contract specifically indicated otherwise. Railway, coach and ferry companies are only contracted to use due diligence to reach the destination in time and cannot be held liable for unavoidable delays such as flooding or freak weather.

  Need for a Codified Legal Framework

  The first attempt at providing a codified legal framework providing protection of the package holiday consumer was provided by the Unidroit ‘International Convention”