Holiday Law - Before Brexit

Introduction

The Holiday Law regime is an area of Law which was recognized and codified much later in time. Till as late as 1993, the package holiday cases were not supervised by any statute and the relationship between a client and package tour operators was solely guided by the principles of Common Law. A Directive was first adopted in 1990 by the Council for European Communities which was called The Package Travel, Package Holidays and Package Tours Directive which was supposed to be implemented by the member nations of the Council. In pursuance of same, the British Parliament passed the Regulation under the same Title which brought the Directives into effect from January 1, 1993.  

Changes Introduced

The Regulation has gone a long way to change the way the cases concerning Holiday Laws are treated in the judicial system, however, even these regulations and are not very comprehensive. Various aspects and processes involved in the entire case were still governed by Common law rules, primarily relying on the directions given by the Court in the case of Jarvis v. Swans Tours Ltd.

The structure of the Regulation was in a manner that the basic structure remained same as the Contract Law, while specific changes were introduced in order to meet the specific requirements of the sector. Thus, where the law relating to offer and acceptance of offer remain unchanged, the law relating to Privity of Contract was greatly altered as in the new Regulation the the persons other than the immediate parties also acquire rights under it and can sue, in much contravention to the general principles of Law of Contracts. Another novel concept that was introduced in the Holiday Law regime by the new Regulation was that of Force Majuere. But the problem here is that it is in much resemblance with the concept of frustration, and because of the lack of clarity in the separate applicability of both the concepts, it becomes extremely difficult to predict the position of law in this regard.

Essentials of “Package”

The primary purpose with which the Directives were imposed was to regulate the conventional package holidays, in theory at least. While in reality, the definition laid down in the Regulation 2 is so wide that it encapsulates other arrangements within its ambit as well.  The text of the Regulation goes as follows -

“package” means the pre-arranged combination of at least two of the following components when sold or offered for sale at an inclusive price and when the service covers a period of more than twenty-four hours or includes overnight accommodation:— (a)transport;

(b) accommodation;

(c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package, and

(i) the submission of separate accounts for different components shall not cause the arrangements to be other than a package;

(ii) the fact that a combination is arranged at the request of the consumer and in accordance with his specific instructions (whether modified or not) shall not of itself cause it to be treated as other than pre-arranged;

The wordings of the Regulation pose plethora of problems of interpretation.

“Pre-arranged combination” - The generic phrase used here creates ambiguity in the applicable Law. Does the pre-arrangement refers to the time the consumer enters the agency, or does it mean before the agent and the consumer enter into a contract? Does the phrase covers tailor-made packages within its ambit?

The ambiguity created by the Regulation here puts the agents in a predicament. On one hand, an agent, offering tailor-made or ad hoc plan, could take a cautious approach and assume the liability and get a bond to provide for it, which would result in heavy financial burden on the agents. While on the other hand, an agent might be willing to take a risk under the belief that such packages do not fall within the ambit of the Regulation and if proven wrong, will have to bear the liability anyway. Thus, clarity is needed to be sought in this regard.

“Inclusive price” - The term is vaguely used in the Regulation, and thus has become prone to being called redundant and non-contributing. The consumer would ultimately end up giving the entire amount of the package, be it an “off the shelf” package or a tailor made one. There is nothing substantial that the term is contributing to the definition.

An argument can be presented to distinguish tailor made packages here. It can be said that where a global price of the package is quoted and the individual components of the package are not priced therein, so as to disguise the the prices of individual elements from the clients, the totalling of the individual components’ prices would not comprise of inclusive price. But this argument cannot sustain as the Regulation clearly mentions that “submission of separate accounts for different components shall not cause the arrangements to be other than a package”, which clearly addresses and counters the argument being presented above.  

“Accommodation” - The use of the word accommodation here is important as it covers Hotels, Villas, Dormitories etc., but an unexplained and unqualified use of the word creates confusion in some marginal cases. This is problematic because including merely the word accommodation would lead to cases like sleeper on an overnight train or a berth in a sea ferry being included under the ambit of this regulation. This is not acceptable as accommodation is not the primary objective behind such transactions, and considering them as accommodations would defeat the purpose of the Regulation.

Thus, some qualification must be added to the word “accommodation” so as to specify its meaning and make a clear distinction in the law.

Who is Liable?

The Regulation mentions three heads which specify the group of people who can be held liable in cases concerning package holidays. The Regulation mentions that the liability can be imposed upon “the organise”, “the retailer” and upon “the other party to the contract”.

“Organiser” - The word of the regulation is that “organiser means the person who, otherwise than occasionally, organises packages and sells or offers them for sale, whether directly or through a retailer”. The problem with the definition mentioned herein as that the test it specifies is how frequently the organiser organises packages, rather than the whether the organizer acts in the course of business, which is the widely used and accepted test in consumer protection laws around the world.

The definition would definitely catch the conventional tour operators, but it will also clutch the organizations who organize trips in a non-professional and non profit making capacity, like the Social Services Department who organise holidays for pensioners on regular basis.

Further, the use of the word “organises” is also a bit problematic as the Regulation assumes that the agent used his/her organizational skills while putting up the package. This would not be the case where the tour provider is following very specific instructions of the client, and thus, may argue that he was a mere facilitator and did not “organise the package”. Thus, the current wording provide a leeway to the agents from incurring liability.   

“Retailer” - The Regulation mentions that “retailer means the person who sells or offers for sale the package put together by the organiser”. The option was given to the member States by the Council of European Communities whether to impose the liability on the organizer, retailer or both of them. The argument however is that the retailers’ liability is concurrent with the organisers’ and provides an extra ounce of protection for the consumers, thus making it a consumer friendly law.

A contention that is often raised is that a newspaper might also be covered in the definition of “Retailer” and thus may be held liable under the Holiday Law regime. In such cases, the courts must look into the language of the advertisements released by the newspaper. If the language used contains terms like “our package”, “we have organised”, as is very common in the newspaper advertisements, then the newspapers wouldn’t be able to escape liability by claiming that they are not the organisers, as then they would be classified under the term of “Retailer”.  

“The other party to the contract” - The phrase has been used as a residuary clause in the Regulation, which is primarily put in to give recognition to the option given by the E.C. to the member states whether to put the liability either just on the organiser, or just on the retailer or on both. Various Regulations mention the liability of the “other party to the contract”, which gives the courts liberty to decide the liability based on sound logic of who could have carried on the duty in the most efficient and easy way.   

Who Can Claim?

The Regulation specifies the beneficiaries of the Regulation and mentions the group of people who can bring a claim under the it by defining the term “Consumer”.  It mentions that “consumer means the person who takes or agrees to take the package (“the principal contractor”) and elsewhere in these Regulations “consumer” means, as the context requires, the principal contractor, any person on whose behalf the principal contractor agrees to purchase the package (“the other beneficiaries”) or any person to whom the principal contractor or any of the other beneficiaries transfers the package (“the transferee”)”.

The English law only provides the benefit of compensation to the parties to the contract, and the position of the people mentioned in the bookings but not a party to the contract is unspecified and dubious. This essentially means that only the person who has made the bookings or under whose name the bookings have been made is entitled to raise any claims for damages and injury suffered by the people travelling with that person would be rendered remedy-less. The definition stated above, to some extent, attempts to overcome this shortcoming of the conventional jurisprudence by including situations like transfer of booking.

“The principal contractor” - The principal contractor is defined as a person who “takes or agrees to take the package”. The problematic word here is “takes”, as it is very open ended and can be interpreted in two ways - the narrow interpretation would be that it refers to the person who actually goes on the package, while the wider interpretation would refer to the person who agrees to purchase the package.

A reasonable and logical look at the above mentioned interpretations would say that the former should be the definition that should be considered, as it would fulfill the object with which the Regulation was implemented. But adopting this narrow definition can cause problems in cases where a company purchases a package. According to this, a company can never enforce its rights as a principal contractor and  a consumer as a company is an abstract person and cannot actually go on the package.

But the benefits of this interpretation far outweighs the cost mentioned herein. This interpretation allows people who take the package but have not actually purchase it enforce their rights as much as a principal contractor. It does not raise any immediate cause of alarm that the company might not be able to enforce its rights, as it is also not the person suffering damage. Whereas by adopting this narrow definition, the law gives force to the people actually taking the package and suffering injury to raise their claims for the injury suffered.

This also gives rights to the transferees to claim damages under this law.

Other beneficiaries - The language that the Regulation uses to define “other beneficiaries” is “any person on whose behalf the principal contractor agrees to purchase the package”. Here, the term other beneficiaries is defined in terms of principal contractor. Which essentially means that unless there is a principal contractor, there cannot be any other beneficiary.

Even if it is argued that this is a result of adopting narrow interpretation, and adopting wider interpretation would have meant that the company is the principal contractor while the employees are the other beneficiaries and thus both would have gained the right to claim. But this contention meets with another mystery created by the Regulation. According to the wider interpretation, the principal contractor takes the package. While for the other beneficiaries, the principal contractor “purchases” the package. Why the distinction of the words has been done by the Regulation is unclear and lacks reason.