Mark Pestronk
Q: You have often written about the legal problems arising in the course of the host-IC relationship. If our agency were to design a hosting program and IC contract from scratch, what terms and conditions could we provide that would help avoid these problems?
A: Here's a checklist of the 10 most common problems in host-IC relationships. After each problem, I provide a synopsis (in italics) of the kind of contract clause that would help avoid it.
1. A new IC comes in with a slew of bookings transferred from the old host (or canceled and rebooked), and the old host sues for the commissions.
Provide that you will not accept transferred bookings without the consent of the old host and supplier and that the IC is responsible for obtaining those consents.
2. The IC makes a bunch of new sales using unauthorized credit cards, and the supplier sues you for nonpayment.
Provide for detailed credit card acceptance procedures along the lines of those in ARC's Industry Agents' Handbook.
3. The IC books on a public website, but the IC expects commissions.
Provide that no compensation will be provided unless the IC uses a booking tool for advisors.
4. The IC collects cash and embezzles it, or the IC collects client checks, deposits them and embezzles the funds.
Provide that the IC is prohibited from collecting cash or depositing client checks.
5. The IC gets suppliers to pay commission directly to the IC, bypassing your agency, even where your IATA number was used.
Provide that the IC may not solicit or accept supplier checks without your consent.
6. The IC uses the name "Manager of [host agency name] Group Department" or the like and signs a hotel contract in the agency's name.
Provide that the IC must use a title with the word "independent" and prohibit signing supplier contracts.
7. The IC accesses your house accounts and other ICs' accounts and poaches the clients.
Provide that the IC may not access any computer file except for those created by the IC and that they may not contact clients of another IC or house accounts.
8. The IC dies or is disabled, leaving inadequate records of pending bookings.
Provide that if the host determines that the IC is unable to process pending bookings following a client's complaint, your agency may take them over, and the agency may assign them to another IC.
9. After the IC terminates, the IC claims commissions for months or years to come.
Provide that, unless the agreement is terminated for cause, you will compensate the IC for commissions paid up to a fixed number of months or years after termination.
10. After the IC terminates, the IC moves pending bookings to a new host.
Provide either: (a) that such transfers are prohibited or (b) you may consent to the transfer if the IC and new host agree to pay you what would have been your share of the commission.
These clauses will go a long way to avoiding what I call the host's nightmare.