The general rule in commercial contractual relationships is that if a limited company is the contracting party, then the directors of that company cannot be liable. If one party to the contract suffers loss or damage as a result of a breach of contract then...
We often hear of problems associated with package tour holidays and customers' attempts to gain compensation. It is important, therefore, to know what is and what is not a package tour for the purposes of working out who is responsible if things go badly wrong.
Fortunately, the European Court has recently given a judgment which clarifies matters. The case involved a family seeking compensation after a Club Med holiday was ruined by a wasp infestation.
The court decided that a package tour is one that includes 'tourist services', sold at an inclusive price, where two or more of transport, accommodation or 'other services' are included and where these are arranged at the time of the original sale. This would exclude, therefore, a holiday for which the hotel and flights are booked separately.
The Government published guidance for package tour operators outlining the definition of a package tour. In this context, a '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:
c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package, and:
- the submission of separate accounts for different components shall not cause the arrangements to be other than a package;
- the fact that the 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.
Whether a holiday is a package or not is important from the point of view of protection in the case of the insolvency of the holiday provider or carrier. Where a package holiday is sold an ABTA registered travel agent will carry a bond which will pay for the repatriation of the holiday maker in the event of the insolvency of the tour company. However, where the elements comprising the holiday are sold separately and not as a package, no ABTA bond is required.
The principal legislation relating to package tours is found in the Package Travel, Packing Holidays and Package Tours Regulations 1992.
In 2012, travellers were given enhanced compensation rights for travel delay and cancellation for travellers leaving the EU with any airline or arriving in the EU from a carrier registered in the EU, Iceland, Norway or Switzerland.
In May 2014, two significant cases were decided in which airlines were ordered to pay compensation for long delays suffered by passengers due to mechanical failures on aircraft. In the first case, the court decided that these were not exceptional circumstances (as, say, the volcanic dust cloud was in 2010) which would exclude them from liability. In the second case, the court ruled that the time limit for making a claim was the general UK lime limit of six years, not two as argued by the airline.
A series of decisions in 2016 have also made it clear that the courts will act vigorously to uphold the legal rights of travellers incorrectly denied compensation by the airlines.
In 2017, a couple who suffered serious illness on holiday as a result of eating contaminated food, but who would have been denied compensation because the hotel was not neglient in its food hygiene and preparation standards, won compensation using general consumer law, arguing that the food that made them ill had been sold to them and was not fit for purpose because of the contamination.