The demise of the package, component selling, split contracting, unbundling, single products, principal or agency – the ever changing face of the marketplace brings with it related problems. When was the last time you carefully reviewed your terms and conditions, sales documentation, website and advertising to ensure the contractual arrangements with your customers were clear and covered you for all eventualities?
Two areas where your terms of business with the consumer are absolutely vital relate to tour organisers’ liability and TOMS VAT. Some companies are split component selling on their websites, in line with the Judicial Review at the specific selection of the consumer, assuming separate contracts apply to each component sale. Providing the terms of business are clear on the website and documentation this should be the case. However if the terms of business and the contractual relationship with the customer are at best ambiguous and at worst incorrect then companies can be exposed to liability claims and TOMS where they thought none existed.
In various industry columns and comments in recent weeks there has been some “hysterical” over reaction to a recent VAT Tribunal Decision – International Life Leisure. International Leisure Life held that it was an agent in relation to holidays sold comprising typically accommodation (either owned by private individuals or hoteliers) and a ferry crossing and therefore should not pay TOMS VAT. After a careful review of the company’s booking conditions and its contracts with the accommodation providers the tribunal held that the company was a principal and not an agent.
It is self evident to most that if a package is sold where the Package Travel Regulations and/or ATOL regulations apply then TOMS should be used. However the key aspects of this case highlighted that for a single service provider (eg an accommodation only supplier) to fall outside TOMS then a supplier must trade with genuine agency terms and conditions both with its customer and its principal suppliers of the service and that the customer should be aware of the principal.
Therefore travel companies who have adapted their model from package selling to component sales can not merely tinker with their terms and conditions but should have them carefully professionally reviewed and tailored to their specific needs particularly if expensive consumer liability claims and TOMS are to be avoided.
Finally a lot has been written about the woeful trading conditions the market has experienced this year and particularly August trading. I think it was bet summed up by a comment made by my colleague and friend Roger Allard when he said “August had about as much bounce as a dead donkey!” Lets hope business picks up for you all running into 2007.