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Module 2
Legal requirements for tour operations
Component 2: Contractual requirements and legal compliance
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LEARNING UNIT 1: Legal requirements of contractual agreements
Some contracts must be in writing in order for them to be enforceable such as marriage contracts, sale of real estate, etc.
It is advisable to always write up some kind of simple contract.
To be legal, a contract must contain the following elements
- Offer and acceptance
- Consideration
- Consent to contract/Reality of consent
- Contractual capacity
- Intention to be legally bounded
- Legality of the purpose/object
Termination of contract may be achieved by means of the following
- Performance: When the parties to the contract fulfil their obligations as agreed.
- Agreement: When both sides agree to terminate even though the contract is incomplete.
- Frustration: When an unseen event (e.g., death) prevents the contract from being completed.
- Breach: When a condition (an essential term of the contract) is broken, the innocent party does not have to fulfil the contract and may sue for damages. If a warranty (a non-essential element of the contract) is broken, the contract remains valid, but the innocent party may receive damages.
Terms and conditions
This defines how a contract is implemented for a customer organisation such as the tour operator. This follows the most common terms that apply when a client books a tour with practical examples of the provisions. This will vary according to the organisational requirements of each company.
Definition of basis or subject matter of the contract
All services, e.g. the tour itinerary, should be described in detail (including the dates) or reference must be made to the web site/other document.Payment terms
This should include all variations and circumstances as well as provisions for increase.
- Tariffs/fares/prices
- Deposits
- Payment methods
- Refunds
Changes
E.g.name changes can only be done beforetickets are issued and are subject to airline approval.
Also see Conditions for Changes and Cancellation.
Cancellation
E.g. once travel documents have been issued, cancellation fees apply to any cancelled bookings. Happy Tours charges 6% cancellation fee for domestic flight bookings and 10% cancellation fee foriInternational flight bookings and package holidays.
Also see Conditions for Changes and Cancellation.
Indemnity
E.g. all participants in the balloon flight are required to sign a standard indemnity form on arrival and international visitors are advised to obtain medical,travel, etc., insurance before leaving their country of origin. All participation in activities is at the guest's own risk. Also see Liability and Indemnity Form.
Insurance
E.g. travel Insurance (against cancellation, illness and loss of baggage) is strongly recommended. Happy Tours will not be liable for any costs incurred as a result of inadequate travel insurance.
Passports, Visas and Vaccinations
E.g. it is the customer’s responsibility to obtain a proper, current and valid passport, visa and relevant vaccinations. Happy Tours shall not be held responsible or liable for any consequence of any nature arising from the customer failing to ensure that they have complied with all these requirements.
Unscheduled Extensions
E.g. in the event of an unscheduled extension to the holiday caused by flight delays, bad weather, strikes or any other cause beyond the control of Happy Tours, it is understood that the expenses relating to these unscheduled extensions (hotel accommodation, transport, etc.) will be for the account of the passenger.
Responsibility and Liability
E.g. Happy Tours acts as agent for local and international ground operators as well as airlines and accepts no liability whatsoever for any loss, damage, injury, accident, delay or any other irregularity arising. It is the client’s responsibility to check that all reservations are correct, before payment is made. Amendment fees thereafter will be the client’s responsibility.
Also seeLiability and Indemnity Forms.
Privacy
E.g. it is our policy to ensure complete confidentiality of all information provided to Happy Tours. No contact or other details will be disclosed to any third parties.
Changes to these Terms and Conditions
E.g. the company has the authority and right to, at any time, change or amend any part of these Terms and Conditions.
Cancellations and changes
Conditions for cancellations and changes of tours vary from company to company in the industry.
If a reservation is cancelled, a cancellation fee is usually calculated as a percentage of the total tour price. The client will then be charged based on how long before the tour it was done. Here follows an example:
- At least 30 days before departure – 25%
- 15-29 days before departure– 50%
- 8-14 days before departure – 75%
- Less than 8 days – 100%
The non-refundable deposit is usually retained in addition to any airline-imposed fees or penalties. (Check CPA)
In the event that a booking includes a special fare, up to 100% of the total fare may be applicable regardless of when the cancellation was made.
Where the booking is for a package, the client will usually be responsible for all cancellation charges of whatsoever nature imposed by the suppliers providing the component parts of the travel arrangements.
For example, Thompsons charges a cancellation fee equal to 10% of the package price on any finalised booking. Thompsons also reserves the right to charge a cancellation fee of up to 100% of the total package, in its sole discretion, in particular circumstances. (Check CPA) Any money that the client has already paid the company is then taken as payment or part payment of any cancellation charges.
Conditions for changes requested by the client
- Changes can be made where possible. The client is to pay all charges imposed by the supplier that provides that particular component of the travel arrangements when a booking is amended any time prior to departure.
- Fares are re-quoted at the time of amendment.
An administration fee per person may be payable per person for each amendment. - After departure, extra expenses incurred as a result of any change will be forthe passenger’s account and any unused service will not be refunded.
Amendments and cancellations en route must be made with our operators directly.
After the trip has commenced, no refunds are usually made for unused services due to your early departure, late arrival, or missed days on tours.
The Booking Form/Reservation is considered a legal binding contract.Online reservations and bookings are widely used today by airlines, car rental companies, accommodation facilities, etc. Before submission, the client is requested to read the Terms and conditions and cannot proceed without first checking a box indicating that they did read and agree with the stipulations.
For example...
I have read, understood and agreed to the terms and conditions and can confirm that I am authorised by my organisation to make this booking. I accept the above registration charges.
No
Yes
The following might also be stated on a booking form: This booking form constitutes a legally binding agreement.
Act of God and insurance
Insurance contracts often exclude acts of God from the list of insurable occurrences as a means to waive their obligations for damage caused by the onset of permanent illness, lightning, hurricanes, floods or earthquakes; all examples of acts of God (
The force majeure clause in a contract excuses a party from not performing its contractual obligations due to unforeseen events beyond its control. These events include natural disasters such as floods, earthquakes and other "acts of God," as well as uncontrollable events such as war or terrorist attacks. Force majeure clauses are meant to excuse a party provided the failure to perform could not be avoided by the exercise of due diligence and care. However, it does not cover failures resulting from a party's financial condition or negligence. (
LEARNING UNIT 2: Risk and insurance
Indemnity claims and the law
“A clause excluding the liability on the part of a person or company, whether it be a hospital, shopping centre, Security Company or fairground, can be incorporated into an agreement between two parties, either as an agreed term in a contract, or in a notice displayed on the premises. When it is contained in the written agreement, it is referred to as an exemption or exclusion clause, and when it is displayed, it is referred to as a disclaimer notice” (Murray, J).
Although exclusion and indemnity clauses are recognised by South African law, it will depend on the circumstances of each particular case if it would be upheld in court. It is the duty of the institution to bring the disclaimer under the attention of the public by displaying a disclaimer notice at a prominent place. The notice should also be clear and concise with regards to exempting the owner from liability.
Even if the word 'indemnity' is nowhere to be found on a document, there may be an agreement to 'indemnify' another party. For example, a tourist agrees not to hold the tour operator company responsible for any accidents or injuries that they may suffer while participating in an adventure activity. "Swim at your Own Risk" signs at an unguarded swimming pool are indicators of an implied indemnity. If you choose to swim and suffer any injury, you may not be able to sue the owner of the swimming pool for medical expenses. If you understood the sign's meaning at the time, you agreed to indemnify the owners. Sometimes an indemnity claim will hold up in court proceedings, but not always.
Claiming indemnity from damages does not always mean protection from liability. It is therefore imperative that tour operators and guides do everything in their power to ensure that all activities and venues comply with high safety regulations. It is also important to take out Liability insurance(see Risk and indemnity below).Indemnity also applies to contractual obligations. For example, you incorporate a consultant's work into a report that you are preparing for a client. The consultant's work is inaccurate and you carry that mistake through into your own work product. You get sued by your client for breach of contract. If you have an indemnity clause, you have a means to seek reimbursement from your consultant for the damages you might have to pay to your client as a result of the error in your consultant's report.
The following is an abstract from the article “Indemnity: A Clause Worth Reading” published in the Good Company Newsletter on 25 October 2007. In this article, J.H. Perten explains the importance of the language of the indemnity clause and that one should take note what is stated.
For example, when does the obligation arise? Does it cover legal fees or just damages? What happens if more than one party is at fault? There is no exact formula to answer these questions. You need to look at the language itself. For example, a typical broad indemnity clause might say:Contractor agrees to indemnify and hold harmless Owner of and from any and all claims, demands, losses, causes of action, damage, lawsuits, judgments, including attorneys' fees and costs, arising out of or relating to the work of Contractor.
The above seems to cover every possible type of potential loss, and is applied even in the demand stage. It also covers attorneys' fees and makes no accommodation for the possibility that someone else might also be responsible.
A narrower version of this clause might say:
Contractor agrees to indemnify and hold harmless Owner of and from any and all claims, demands, losses, causes of action, damage, lawsuits, judgments, including attorneys' fees and costs, but only to the extent caused by, arising out of, or relating to the work of Contractor.
This additional language suggests an apportionment of relative fault.
Maybe you want to cap your exposure. The indemnity might read:
Contractor agrees to indemnify and hold harmless Owner of and from any and all claims, demands, losses, causes of action, damage, lawsuits, judgments, including attorneys' fees and costs, to the extent caused by or arising out of or relating to the work of Contractor. In no event shall the maximum liability hereunder exceed the sum of R ______. or
"In no event shall the maximum liability hereunder exceed the amount actually paid to Contractor under this contract."
Indemnity form
This is a legal agreement by which the tour operator/service provider clarifies liability if something goes wrong with an activity or service offered. The agreement is used to protect the company against any future claims or other losses (see Customer Protection Framework for more information). The wording of an Indemnity Clause is very important and must be accurate and inclusive as possible. Signed indemnities are subjected to the same legal requirements as for contracts and may be rendered invalid if it does not comply for example if signed by a minor or under pressure. Even though clients transfer risks from the company by signing an indemnity form, there might be financial expenses in defending claims brought against a company. Indemnifying oneself against one’s own negligenceMore controversial is the tendency to indemnify oneself against one's own negligence. This tendency finds its roots in Durban Water Wonderland vs. Botha & Another (1999) where the Supreme Court of Appeals upheld an appeal that an indemnity, which absolved the appellant from any liability even if it were to be found to have acted negligently, was valid and enforceable.
This case was however, restricted to the so-called Ticket Purchasing' cases and is yet to be universally endorsed. It is interesting to note that in a challenge to an indemnity clause in a very recent river rafting case the courts did not comment negatively on an indemnity which read as follows: "not to claim from and undertake not to take legal action against and to indemnify, hold harmless and absolve Storms River Adventures, its owners, members, guides, organisers, servants, helpers and agents from any or all claims and or liability in connection with loss or damage to any property or injury to myself or even my death arising from negligence of the above parties or from any cause whatsoever in the course of any tours and/or transport organised by Storms River Adventures in which I partake ".
Adapted from Press release from SATIB Risk Management Consultants (No.5 in an series of articles previously published in SATASA’s Tourism Tattler Journal).
Declining an indemnity insurance
The tour operator should ensure that clients sign an indemnity form prior to departure when they refuse to take out travel insurance releasing the agency from any claims that may arise usually covered by it. It is important that all passengers or participants in a tour/ activity sign indemnity forms individually since a person cannot voluntarily assume risk on behalf of other persons. See Africancape Travel Indemnity example on the next page.Travel insurance for travellers
Travelling involves a number of risks and travellers never know what unforeseen events might impact on their journey. These may include terrorist attacks, natural disasters (floods, earthquakes, volcanic eruptions, tsunami’s, etc.), accidents, and personal injuries or falling ill, and should be taken injuries are all real dangers that exist in our world, and need to be taken into account when planning a trip to a foreign country.Travel insurance is insurance that is intended to cover the traveller’smedical expenses, trip cancellation, lost luggage, flight accident and other losses incurred while traveling, either internationally or within one's own country.
The insurance broker will take care of the traveller in the event of loss, and personal injury, or death.
AFRICAPE TRAVEL INDEMNITY FORMS
TRAVEL INSURANCE
In accordance with the Tourism Act NO.,72 Section 22 of 1993, Africape Travel has offered me Travel lnsurance for the duration of my / our journey. I/ we hereby decline the offer and therefore indemnify Africape Travel from any liability and responsibility in case of unforeseen:
Medical Expenses, Assistant Services, Hospitalisation, Accident Death or Disability, Trip
Cancellation or Curtailment, High-jacking, Baggage Loss, Baggage Delay, Travel Delay, Stolen Cash or travel documents and Personal Liability Law Suits, whilst on journey.
Client Name: ………………………………………………………………………………..
ID number/ Passport...... …………………………………………………………………..
Date: ………………………………………
Signature: ......
I am duly authorised to sign on behalf of my family:
Names of family members:
Adapted from Energy guides learner guide, FETC: Tourist guiding, SAQA Qualification ID 71549 NQF4, April 2012
Registrationof South Africans Citizens (ROSA)