Abusive Clauses in Tourism

The Internet service of DziennikWschodni.pl informed in March this year that the master service agreements of one of the travel agencies operating in Lublin contained as many as 17 provisions which are deemed illegal. Is it a high number? Given the significantly long term of consumer protecting law having been in force now, it may be acknowledged that the number is indeed extremely high. Of course, in my legal practice, I encounter such cases, but it is apparent that entrepreneurs’ awareness in that respect is growing. It results from admittedly good law regulations and quite effective operation of the Office for Competition and Consumer Protection and the Competition and Consumer Protection Court. However, some resolutions of the said institutions can be deemed controversial.

The tourist industry, which operates on the typical consumer market, should be especially sensitive to the issue. Combing through the rulings awarded by the Competition and Consumer Protection Court, one may easily conclude that cases involving travel agencies indeed constitute a significant percentage share.

The Polish system of consumer protection is really comprehensive and, in principle, lives up to the European standards. It is impossible to describe the whole system in one article, hence, I will now focus on the question of abusive clauses only. In the following publications, I will try to discuss the remaining issues, which may be of particular importance to the tourist industry.

According to article 385(1) of the Civil Code, abusive clauses are such contractual provisions which regulate the rights and obligations of consumers in a way that is contradictory to the good practice, grossly infringe consumer’s interests, and have not been individually agreed with them. Such clauses are not binding on the consumer. Admittedly, that has no influence on the entire agreement, which in its remaining scope continues to be valid and binding on the parties. Contractual provisions which have not been individually agreed with the consumer are such clauses whose wording the consumer had no actual influence on.  In particular, that refers to clauses adopted from the master service agreement proposed to the consumer by the provider. In other words, if a travel agency presents to a consumer its draft agreement – which is apparently the usual case – it may be assumed a priori that none of the clauses contained in the master service agreement was individually agreed. That is why it is so important for master service agreements used by travel agencies to be drafted diligently and to account in their wording for the fact that, in our legal system, consumers are subject to special protection and that the institutions designated for ensuring such protection are effectively monitoring the market and are taking actions aimed at clamping down on unfair conduct. Master service agreements applied in so-called consumer dealings are subject to inspection by the Competition and Consumer Protection Court, which resolves on the basis of a suit filed. There is a remarkably long catalogue of persons eligible to sue for master service agreement provisions to be deemed abusive. That may be done by:

• prospective customer of an entrepreneur who applies a master service agreement, i.e. a person who, according to the entrepreneur’s offer, may enter into an agreement with the entrepreneur,
• grassroots organization whose statutory objects are to protect the interests of the consumer,
• district (municipal) ombudsman for consumer rights protection,
• President of the Competition and Consumer Protection Office,
• foreign entity entered onto the list of organizations entitled within the EU to sue for master service agreement contractual provisions to be deemed abusive,
• prosecutor,
• Citizen Rights Ombudsman.

If the claim is allowed, in the sentence conclusion, the court quotes the wording of the master service agreement clauses deemed abusive and bans them from application. The sentence is published in the Court and Commercial Gazette. Moreover, the court sends a true and exact copy of the final and enforceable judgement to the President of the Competition and Consumer Protection Office, who enters it into the register of master service agreement clauses deemed abusive. In order to avoid problems related to inspections as outlined above, it is advisable, while drafting master service agreements, to attach particular attention to such clauses which might be controversial in terms of consumer rights protection. There, of help may be article 385(3) of the Civil Code, which provides the interpretation norm, and contains a catalogue of provisions which are deemed – in case there are doubts and reservations – abusive. The catalogue comprises clauses which:

• exclude or limit liability to the consumer for damage to person,
• exclude or grossly limit liability to the consumer for non-performance or ill-performance of the contractual obligations,
• exclude or grossly limit liability set-offs between the consumer and the contractor,
• allow for such provisions which the consumer has not had an opportunity to familiarize themselves with prior to agreement signing,
• allow the provider to assign the rights and impose the obligations resultant from the agreement without the consumer’s consent,
• make agreement signing conditional on consumer’s promising to further enter into similar agreements in the future,
• make agreement signing, its content, and performance conditional on entering into another agreement, not being directly related to the agreement containing the provisions in question,
• make the agreement performance conditional on the circumstances dependent only on the provider’s willingness,
• confer on the provider powers to construe the agreement to be binding on the parties,
• entitle the provider to unilaterally amend the agreement without a gross reason as  indicated in the agreement,
• confer only on the provider powers to acknowledge performance compliance with the agreement,
• revoke the obligation to refund the consumer for the consideration they made towards the agreement performance which has not been delivered as a whole or in part, if the consumer resigns from entering into or performing the agreement,
• allow for consumer’s losing the right to demand that consumer’s performance delivered before the performance of the provider, should be returned, when the parties terminate, with or without notice, or rescind the agreement,
• deprive only the consumer of the right to terminate, with or without notice, or rescind the agreement,
• make a reservation for the provider to be entitled to terminate with notice
• an open ended agreement, without indicating any gross reasons and the according term of notice,
• impose only on the consumer the obligation to pay the agreed consideration in the event of resignation from agreement signing or performance,
• impose on the consumer, who has not performed an obligation or rescinded the agreement, the requirement to pay an egregiously high contractual penalty or compensation fee,
• stipulate that the fixed term agreement should be prolonged unless the consumer, who is granted an egregiously short term of notice, states otherwise,
• allow for a unilateral right conferred on the provider to amend, with no compelling reasons indicated, the substantial elements of the agreement performance,
• assume that the provider should be empowered to determine or raise the price or remuneration after signing the agreement without conferring on the consumer the right to rescind the agreement,
• make the provider’s liability conditional on the obligations performance by persons through which the provider enters into the agreement or with whose help the provider performs their obligations, or make such liability conditional on consumer’s meeting excessively onerous formalities,
• allow for the consumer’s obligation to be performed despite the provider’s non-performance or ill-performance,
• exclude the jurisdiction of Polish courts or subject the case for resolution by a Polish or foreign arbitration court or another body, as well as impose case resolution by a court which, according to the law, is not territorially competent.

Of course, the above-enumerated clauses should be avoided. It is also advisable to confront individual clauses against the register of master service agreement clauses deemed abusive. Once a provision is entered into that register, the ruling of the Competition and Consumer Protection Court constituting the grounds of the entry becomes effective towards third parties. Applying in master service agreements the clauses which have been entered into the said register is deemed to be a banned practice, which infringes the collective consumer interests and may be penalized by the President of the Competition and Consumer Protection Office with a pecuniary penalty amounting up to 10% of the entrepreneur’s revenue generated in the fiscal year preceding the year when the penalty was awarded. Such penalty may affect quite severely. Numerous items listed in the register kept by the Competition and Consumer Protection Office refer directly to the tourist industry. Below you will find a few examples of clauses which – due to their being entered into the register – have been banned from use:

1. The organizer bears no liability for clients’ luggage in case of its being mistaken, left behind, or stolen.
2. The organizer bears no liability for any imperfections occurring in the course of the event due to reasons beyond the organizer’s control.
3. The travel agent bears no liability for any inconvenience occurring in the course of the event due to reasons beyond the organizer’s control, e.g. weather conditions, state decisions, influence of other circumstances resultant from force majeure or attributable to an event participant.
4. The travel agent bears no liability for any inconvenience in the hotel caused by e.g. a temporary break in water supply, heating or air conditioning, repair or maintenance of swimming pools.
5. The travel agent entirely disclaims its liability for any flaws related to the events covered by the offer provided that the offer was presented otherwise by persons acting on behalf of the travel agent.
6. The travel agent bears no liability for any damage caused by third parties’ actions, such as theft, burglary, or fire. The travel agent is accountable for (guilty of) non-performance or improper performance of the agreement.
7. The Organizer bears no liability for any information given by agents which is inconsistent with the arrangements determined hereunder. Moreover, the organizer bears no liability for any information given by Agents which is contradictory to the content of the catalogues and information bulletins containing the valid Organizer’s offer.
8. Carriage of participant’s luggage is subject to participant’s entire responsibility and the Organizer under no circumstances may be held accountable for any potential damage, theft, and loss, which may occur in the course of excursions.
9. Imperfections attributable to the Client as well as those caused by legal and natural persons not being in a legal relationship with the Organizer are not deemed to be the event flaws.
10. The Organizer entirely disclaims its liability for any flaws related to the events covered by the offer when the offer was presented as a different one by persons acting on behalf of the Organizer.
11. The Organizer disclaims its liability for damages due for non-performance of the agreement by intermediaries operating within the Organizer’s network.
12. The Organizer bears no liability to the Client for damages above the amount of the actual damage and lost profits as long as they are documented in a manner prescribed by the provisions of the Civil Code and the Act on tourist services. The Organizer is not liable for any aggravated damages.
13. The Organizer disclaims its liability for damages due to accidents, loss of good health, in an amount exceeding the amounts guaranteed by the general policy of the insurer with whom the insurance agreement was concluded.
14. If, for reasons not attributable to the Organizer, performance of some obligations has to be substituted with an obligation of the same or higher value, which will not constitute a defect of the agreement. In justifiable cases, the Organizer may exercise the right to change the carrier, place and time of the coach departure and arrival, as well as the route.
15. The Organizer’s liability for damage incurred by an event participant due to non-performance or improper performance of the agreement is limited up to the amount of the event price.
16. In the case of Last Minute events, the Client may not make the same requirements as with full-price events.
17. In the case of Last Minute events, the Organizer guarantees only the basic conditions allowed for in the agreement.
18. The Organizer disclaims its liability with regards to information provided by agents and intermediaries on guaranteed conditions, which are divergent from the provisions hereof.
19. In the case of the “Joker” or “Last Minute” offer (where there is no precisely defined place of accommodation), the Organizer guarantees only a particular category of accommodation and that does not need to be the facilities presented in the catalogue or the sales offer.
20. If, a few days before the event commencement, the Travel Agency still has some vacancies left, it may occur that those are sold at a discount as a Last Minute offer, within which some part of the services provided may stray in terms of quality from the established standard as indicated in the catalogue, and the Client is not entitled to require the same as those who use the full-price offer.
21. 21. All and any claims by the Client who accomplished the due payments related to the termination of the Agreement under point 4 of the Terms and Conditions.
22. Payments should be made to the intermediaries selling events on behalf of the Organizer.

If one of the above listed clauses is used in a master service agreement, the consequences may hit bitterly. In order to avoid the threats indicated, one should regularly consult the register of master service agreement clauses deemed abusive. The register is from time to time supplemented, thus it is worth looking through on a regular basis. It is also advisable to remember that the subject matters of consumer agreements have been additionally regulated in the Act of 29 August 1997 on Tourist Services, in which entire chapter 3 is dedicated to customer protection. The solutions referred to therein factor in the specific nature of the industry and enhance the consumer position in their relations with travel agencies. That area of law is considerably extensive and will be dealt with in my further articles.

The article was published in the monthly “Rynek Turystyczny” – “Tourist Market”).