Category: Covid-19 Help and Advice

The World Starts To Slowly Open 

The world is slowly starting to ‘open up again’, and educational trips are likely to start resuming both to and from the UK over the coming months.  In this article our Associate Solicitor, Nick Parkinson, and Natalie Dindar discuss what that might mean for the educational sector.

The fallout of the Covid-19 pandemic has prompted many service providers to question what their obligations are to customers in terms of trips that are cancelled, curtailed or amended. The starting point is to determine whether or not you are providing a package holiday. What should be straight forward in theory inevitably never is, and education trips are no exception. In this article, we will firstly look at when providers of educational service will, or will not, be providing packages. Secondly, we look at what the impact of Covid-19 may have on the educational sector of the travel industry.

What Is a Package?

The bottom line is that a lot of educational trips can be constructed in such a way as to avoid becoming a package. However, it is important to know where the ‘lines in the sand’ are to make sure you never cross them by accident, and fall into ‘package holiday sinking sand’. Let’s start with reminding ourselves of the basics. In simple terms, a package is formed under the Package Travel Regulations 2018 when two or more travel services are sold at the same point in time, such as:

• Carriage of passengers (flights, trains etc)
• Accommodation
• A ‘tourist service’

The ‘typical’ package that we are all familiar with would be ‘flights and accommodation’. However, things get more complicated where one travel service (e.g. accommodation) is combined with something that may or may not be a ‘tourist service’. In particular, the question for the purpose of this article is what happens when accommodation is combined with ‘educational services’, excursions, or both.

Does it Matter?

Definitely. The risks and obligations when selling packages are considerably higher because:

• You are legally obliged to hold insolvency protection
• You have much higher obligations to customers in terms of refunds etc.
• You have various information requirements you are legally obliged to provide to customers in order to make the contract legally binding

Aside from that, it is a criminal offence not to comply with some of the above requirements.

Carriage

Not much to say here. If you have included carriage such as flights or train tickets, you have already provided ‘one travel service’. Provide one more, and you have supplied a package holiday. Supplying a package therefore seems inevitable if you are supplying carriage and accommodation.

Accommodation

Again, if you have included accommodation as part of the trip, you have most likely already ticked ‘one travel service’. Only one life left before it becomes a package! 

One exception, however, is that accommodation for ‘residential purposes’, such as for long-term language courses, will NOT be considered a ‘travel service’. 

Providing any guidance as to when accommodation becomes ‘long-term’ would, of course, make life far too easy. Most likely, however, accommodation over a few weeks for a ‘summer school’ is likely to be a ‘travel service’.  If you are providing students with ‘longer term accommodation’ than that, and you are not sure whether it is long enough to qualify for this exemption, feel free to get in touch with us for further advice.

Educational Services

Are educational services, typically from a language school, likely to be considered ‘tourist services’? If the purpose is specifically and exclusively for education rather than ‘travel and leisure, the answer is ‘probably not’. A good example of that would be a language school that provides nothing more than classroom (or webinar) based languages classes.

Although contentious at the time, that conclusion is consistent with the views taken by the European Courts back in 1999, based on the old 1992 Package Travel Regulations. Not to detract from the obvious Pink Floyd references in this article, and to instead quote the Beach Boys, wouldn’t it be nice if this had therefore been put beyond doubt by providing specific guidance for the educational sector in the 2018 Regulations? Equally so, if BEIS had issued some guidance on point. Wishful thinking, but in our view there is nothing new in the 2018 Regulations to change the position.

Excursions

The position seems simple enough if the educational services are exclusively educational; but what happens if the provider starts to incorporate a few ‘day trips? Naturally, it seems a tempting selling point if the students are not confined to the four walls of a classroom. What, if anything, changes if the provider were to include one or more excursions to give the students some ‘downtime’?

If the excursion is exclusively for ‘educational purposes’, it is probably not a ‘tourist service’ at all. Conversely, if it exclusively for ‘travel and leisure’, it will be a ‘tourist service’ if:

• It accounts for a significant proportion (25% or more) of the total value of the travel services, or
• It represents an essential feature of the trip, or
• It is advertised as an essential feature of the trip.

So, if you are selling an educational trip with accommodation and a language school, for say £750, probably best not to throw in a trip to watch Manchester United for an extra £250. That football ticket would probably be a ‘tourist service’ for the purpose of the Regulations and, therefore, all of a sudden you have sold a package!

As to where you stand where the excursion has a flavour of both education and travel & leisure, things get much more difficult. All in all, it’s just another ‘gap in the law’.

Therefore, if you are selling trips with one or more ‘excursions’, and you are not sure whether or not this will create a package, do not hesitate to get in touch with the team here for advice.

The Impact of Covid-19

The ongoing Covid-19 pandemic has, and continues to prompt a range of questions from providers of educational trips, in particular as to your obligations when it comes to refunds, cancellations and alterations.

Providers are concerned about the implications should there be an outbreak at their language school. What if the students contract the virus? Could we be liable for an illness/injury claim? Where do we stand with refunds? What if students have to quarantine at the accommodation for longer than expected? What if they miss their return flights home? What if I have to make changes to the itinerary? Can we switch to an online course instead? Who pays the additional costs of all of this?

The starting point, as above, is to determine if you have sold a package. The second step is to look at your T&C’s to see what, if any clauses, have been included to cater for the situation at hand. Potentially, we may have to consider whether any clauses in your T&C’s are ‘fair’ and, therefore, enforceable. There are a lot of variables to consider here, so if you do find yourself in a situation and you are not sure where you stand, please feel free to get in touch.

Are Your T&C’s Up To Date?

Hey, teachers, leave those T&C’s alone! Actually, no. You may be excused for assuming that it is ‘too late’ to change your T&C’s if you have a number of trips booked for say September, that were booked under your current, and now ‘out of date’, T&C’s. In fact, it might be possible to change those terms with your customers, providing the customers are agreeable to do so.
Either way, even if your T&C’s were only updated last year, a lot has changed over the last 6 months! With the uncertainty that surrounds the ongoing pandemic, there are good reasons to consider updating your T&C’s because:

• You may be able to enhance your contractual rights to obtain additional costs from your students/customers for certain ‘covid-19 scenarios’
• What was once ‘unforeseeable’, and may previously have fallen under a force majeure clause, is becoming increasingly foreseeable! A force majeure clause may therefore no longer offer the protection it once did. Covid-19 scenarios therefore can and should be dealt with under separate clauses.
• There are all sorts of specific Covid-19 scenarios that could arise, and it helps for both parties to have clarity on what each party’s liability and obligations are in all of those scenarios. For example, it is better that it does not ‘come as a surprise’ to a student if they are forced to quarantine and are then landed with a bill for the additional costs.

If you would like a member of our commercial team to review your existing T&Cs and provide you with a free no-obligation quote, feel free to get in touch with nick@travlaw.co.uk.

Travlaw advise on regulatory work, litigation, commercial, employment law and intellectual property (to name but a few), all specifically tailored to meet the needs of the travel industry.
If you have any questions, call 0113 258 0033 or email advice@travlaw.co.uk

This is our final article, part of our “COVID-19 – What Can You Do right now?” article series. This time the focus of the article is on Agency Agreements and working out the clauses within such agreements helpful to you in this unprecedented time of COVID-19.

We have set out three articles for you, Part I helps to explain your position on commercial contracts and force majeure; Part II for Supplier Agreements; and Part III for Agency Agreements.

Where you are an agent or a principal, it should be the case that you have an Agency Agreement in place. The capacity of each party to the Agency Agreement should be laid out clearly so that, where difficult situations like COVID-19 arise, each party knows what to do and where responsibilities lie.

Customer responsibility

Fundamentally, an Agency Agreement will set out the capacity in which each party is acting. It will (hopefully) explain clearly who is the principal (and therefore the party entering into the ultimate contract with the consumer) and who is the agent, (and therefore the party who simply sells the services on behalf of the principal).

On the question of responsibility to consumers, it will ordinarily be the principal that is the party responsible to the consumer, given that the contract for services will be between the principal and the consumer. The agent will be selling the services on behalf of the principal but will typically not be a party to that contract. It should therefore be the principal who is responsible for any amendments, cancellations or refunds in light of COVID-19. Such refunds (or credit notes) coming from the principal themselves. Therefore, any agents who receive requests or complaints from consumers in respect of such issues should promptly refer those issues to the principal for direction / resolution.

However, the Agency Agreement should be read closely to confirm this is indeed the case; as a blur in the line of capacities or responsibilities may complicate this issue and result in the agent taking on more responsibility than ordinarily assumed.

Force majeure clause

It is likely that your Agency Agreement includes a force majeure (FM) clause. This will set out party obligations when an event makes it impossible for the affected party to perform their contractual responsibilities. FM events are usually defined as acts events or circumstances beyond the reasonable control of the party concerned, but whether an event is considered as an FM event will depend entirely on the wording of the contracts FM clause. Please see our “Part I: COVID-19 – What Can You Do right now?” article for more information on how to understand your FM clause.

Where an FM clause in your Agency Agreement has been vaguely drafted; doesn’t cover (or doesn’t cover clearly) the scenario or event; or, doesn’t fully set out the consequences of invoking the FM clause, you may find yourself in the murky waters of the laws of frustration, contra proferentum… or even having to revert to a foreign lawyer in the absence of an E&W jurisdiction clause. Nick Parkinson has offered advice in such predicament in his article, found here.

Customer contact

When FM events occur (such as COVID-19) it is likely that the customer will be worried about the services they have bought under the contract with the principal and, although amendment, cancellation and refund responsibilities may lie with the principal, depending on the words of the Agency Agreement it may be the agent who is responsible for liaising with the consumer in respect of those issues. For example, the agent may be required to take calls from worried consumers or communicate policies on refunds and cancellations.

Before contacting consumers and dealing with consumer concerns, the agent must be sure that it is acting in accordance with the terms of its agency agreement responsible for doing so. If an agent acts outside of its scope of authority (i.e. by stating a refund will be given without the principal’s confirmation that this is the case or indeed by going so far as to pay a refund, in the first instance, without principal approval), it may find that it is in breach of its contractual obligations and possibly liable for those refund payments, as a result.

Payment

The fundamental reason for parties to sign an Agency Agreement will be for the agent to promote and sell services on behalf of the principal, typically in return for commission. However, if a FM event occurs, either having the effect of sales not being taken, consumers cancelling holidays already booked or, consumers receiving refunds, what happens to the commission (to be paid, or already paid to the agent)?

There are no general / common law legal rules about how commission will be handled, in such circumstances. It is ultimately the parties’ decision how any payment will work and so the terms of any given Agency Agreement will be crucial here. Whether the agent will remain entitled to commission in full, whether they will be entitled to commission on cancellation charges only or whether the entitlement will lapse altogether will depend on the drafting of this clause.

Please contact us if you would like to discuss this further.

Following on from our “Part I: COVID-19 – What Can You Do right now?” article, focusing on commercial contracts and force majeure, this is our second article taking on the COVID-19 pandemic form a commercial perspective, this time focusing on Supplier Agreements and any clauses within these, that may assist you right now.

We have set out three articles for you, Part I helps to explain your position on commercial contracts and force majeure; this article for Supplier Agreements; and Part III for Agency Agreements.

If you have any Supplier Agreements currently in use, whether or not they were drafted by lawyers, and no matter when they were entered into (providing that they have not been terminated), here are some helpful tips to understand where you stand when it comes to your contractual relationships; any obligations you may have in light of COVID-19; and the clauses that may assist as a starting point.

Force majeure clause

It is likely that your Supplier Agreement includes a force majeure (FM) clause. An FM clause seeks to set out party obligations when the occurrence of a specific event makes it impossible for the affected party to perform their contractual responsibilities. FM events are usually defined as acts events or circumstances beyond the reasonable control of the party concerned, but whether an event is considered as an FM event will depend entirely on the wording of the contracts FM clause. Please see our “Part I: COVID-19 – What Can You Do right now?” article for more information on how to understand your FM clause and any effects an FM event may have to your Supplier Agreement.

Where an FM clause in your Supplier Agreement has been vaguely drafted; doesn’t cover (or doesn’t cover clearly) the scenario or event; or, doesn’t fully set out the consequences of invoking the FM clause, you may find yourself in the murky waters of the laws of frustration, contra proferentum… or even having to revert to a foreign lawyer in the absence of an E&W jurisdiction clause. Nick Parkinson has offered advice in such predicament, in his article ‘Where Do We Stand With Our Suppliers?’

Liability

Does your Supplier Agreement include a limitation of liability clause? Contracts between businesses commonly include a clause that seeks to impose the liability of either one or both parties to the contract. Such limitation can be identified in a contract where the clause includes words to the effect of: The [PARTY’S] liability under or in connection with this Agreement shall be limited to £[SUM] for each and every claim arising out of the same originating cause or source. This limit shall apply however that liability arises, including, without limitation, a liability arising by breach of contract, arising by tort (including, without limitation, the tort of negligence) or arising by breach of statutory duty.

The safest way to limit a liability, is by including clear words – as the clause above limits liability for claims in breach of contract. A liability clause will normally be ineffective if it seeks to exclude certain liabilities, such as fraud, personal injury or death; is not reasonable under the Unfair Contract Terms Act 1977; or excludes all liability whatsoever.

Nevertheless, in scenarios where you are at risk of incurring liabilities to either a supplier or indeed another third party as a result of the COVID-19 pandemic and there is no FM clause or an ineffective FM clause in place, it is worth considering whether there is a limitation of liability clause in place that would offer some protection.

Termination

Termination of an agreement may occur at the end of a fixed term, or on the occurrence of an event. Ordinarily this means that the contract (and most of the clauses within it) will have ended, excusing the parties of their primary obligations. A termination clause may begin: Either party shall be entitled at any time to terminate this Agreement without penalty on the happening of any of the following events…

However, your FM clause may set out the effects of an FM event: and this could potentially allow your Supplier Agreement to be terminated in accordance with a termination clause. This may offer some assistance, if a contract has become undesirable to perform as a result of the COVID-19 pandemic.

Commercial Provisions

Ordinarily, parties will also need to check the commercial terms of the Supplier Agreement, along with all the legal terms above, to see what will happen if, or when, termination occurs. For example, what will happen to the services not provided? Will the supplier provide refunds for these services? On the other hand, will the parties miss any payment deadlines? What about outstanding monies?

Hopefully, your Supplier Agreement is clear about such arrangements, but where it is not, it may involve mutual discussions so that amicable resolutions can be reached. 

Please contact us if you would like to discuss this further.