A Brief Introduction About the Travel Agency Contract
A travel agency contract is known to be an agreement that is made between a travel agent and a tour operator company providing the agency the authority to run the business on its behalf. The company might give the agency all the rights to use its advertisement as well as promotional material as well. The agency has to give regular updates relating to its sales and bookings monthly.
Who Takes the Travel Agency Contract?
A travel agency contract is made between a travel agent and a tour operator company.
Purpose of the Travel Agency Contract
A contract gives the agent the authority in order to operate the business for the company. The contract is obligatory on both parties, given that it is in existence. The duration of this contract is indefinite but could be altered by the company at any point in time if there is any breach of contract.
Contents of the Travel Agency Contract
This travel services contract consists of three forms:
- Net rate agreement: This type of agreement contains the tour operator selling their tours or activities towards the agent at a discounted net rate (or wholesale rate) depending on the rack rate or retail rate. The agent sells the tours towards their clients at the retail rate and keeps the difference as their margin. The agent pays the tour operator for every tour sold during a specific period.
- Commission agreement: This kind of agreement includes the agent selling the tours or activities offered through the tour operator at the rack rate or retail rate directly to clients. The operator calculates a commission for sales made by the agent in the course of a specific period as well as pays them an agreed-upon commission.
- Deposit as commission agreement: This kind of agreement includes the agent taking a deposit when they sell the tour towards a client. The deposit, which is generally between 10-30%, is the agent commission. The remainder is remunerated towards the tour operator by the client at the time they take the tour with the operator. In this contract, the operator doesn’t need to pay the agent as they have received their commission directly from the client during the time of booking.
- Waivers of liability
- Representations and Warranties
- Termination of the Contract
- Minimum sales and tours that must be booked in the contract
- Minimum royalty or commission that must be paid to the operator or the company
- Training services to be provided to the tour operator
- Details of services to be offered to the clients
- Responsibility of additional costs and statutory fees
- Waiver of responsibility for the presence or absence of certain events as represented by the operator to the clients
- Indemnification for misrepresentations or wrong statements
- Advances or Security Deposits
- Insurance services as part of the package
- Additional benefits that the operator can offer to the customers
- Limits on pricing, discounts, and other benefits
- Assignment and sub-assignment of the tour operation business
How to Draft the Travel Agency Contract?
A travel agency contracts sample may be used as a reference for drafting such contracts. The following points should be considered while drafting travel agency contract template.
- Mentioning the names of both the parties in this contract: One must give the names and addresses of the two parties who are going to sign the agreement, i.e., the company and the travel agency or the names of those who are going to sign on their behalf. For the company, it would be a member of the Board of Directors, whereas the agency might authorize a representative towards signing the document on their behalf.
- Specifying the purpose of the contract: One must define the subject or purpose of this contract. Here the agent agrees in the direction of working on behalf of the promoter as well as engages in booking tickets, rooms, and transport services for the company to expand its client base. The agency would be allowed to utilize the promotional material of the company to advertise for these services.
- Explaining the terms of booking and payment: The terms of payment would make it clear that all booking details must be sent towards the promoter before the final confirmation. The promoter has the right to altering or canceling the booking due to any reason whatsoever. The entire booking sum received shall be sent to the promoter within 7 days after confirmation and 3 days after confirmation in case of emergency bookings.
- Be clear relating to liabilities and cancellation charges: The travel agency shall be held fully accountable for all the transactions made in the name of the company utilizing the company account. For cancellation of bookings due to the agent, he shall be liable towards paying a certain amount as a loss recovery, as per the contract. The company might apply some additional charges before signing the agreement.
- Duration of agreement and bank details of both the parties: The contract would require specifying the date of the agreement and the duration for which it remains valid. If one of the parties would want to discontinue the contract, they might do so by giving appropriate notice for the same. The bank details of both parties must be clearly stated for transaction purposes.
Negotiation Strategy
This contract is binding on both parties, given that it is in existence. The duration of this contract is indefinite but can be altered by the company at any point in time if there is a breach of contract. The negotiation strategy would depend on the commission payable, and the packages that would be onboarded including the minimum sales that need to be made
Benefits & Drawbacks of the Travel Agency Contract
Benefits
- The contract would offer items listed in this agreement towards businesses and clients as part of travel packages.
- The Travel Agency agrees towards offering such items at prices approved through the Company without exception.
- The Travel Agency approves to report all sales towards the Company every week.
- The Travel Agency would provide the Company with full contact information for each customer purchasing the Company’s services or accommodations.
Drawbacks
- A travel agent contract may charge a commission on every sale, and also it could impose restrictive terms and conditions.
What Happens in a Case of Violation?
If there is a breach of contract bonds(1), either party might terminate the contract in its entirety with prior written notice within 30 days of the requested termination date.
If any terms or conditions in the agreement are breached, the responding party would have the opportunity to terminate this agreement.
Upon termination, the Travel Agency approves to return any property provided through the Company in the condition it was received in.
Upon the termination of this travel services contract, all bookings in the process shall become void, and any outstanding balances would become due.
Thus a travel agency contract consists of all the clauses, terms, and conditions that make the agreement a legal document that is binding on both the parties.