Keenan and Riches’BUSINESS LAW

2 The holiday is often arranged by one individual on

behalf of himself and his family or a group of friends.

The rights of holidaymakers who did not personally

make a booking may not be clear.

3 Holiday selections are made on the basis of advertis-

ing, descriptions in a brochure and advice by travel

agents. Customers need adequate and accurate infor-

mation to make an appropriate choice, but brochures

are usually prepared a long time in advance of the

holidays to which they relate.

4 The holiday may be disrupted by events beyond the

control of the tour operator: flights may be delayed by

bad weather or industrial action by airport staff, or

independent hoteliers may have overbooked their

hotels. To what extent should the operator be held

responsible for the holidaymakers’ loss of enjoyment

when such things happen?

5 Competitive pricing policies have led to low profit

margins and the need to reduce financial risk to a

minimum by restricting consumers’ rights through

the use of standard terms and conditions.

Legal controls over package holidays

Before 1993 there were few legal rules designed specific-

ally to control the package holiday industry. By and large,

general consumer protection measures were used.

1 Civil law remedies.Individual holidaymakers could

bring actions in contract or tort against the tour oper-

ator if the holiday failed to live up to expectations (see,

e.g. Jarvisv Swans Tours(1973)). Although the travel

agent acts on behalf of the tour operator, the agent may

incur liability to the consumer in tort if, for example, he

or she makes untrue statements about a holiday. Con-

sumers’ civil remedies were enhanced by general con-

sumer protection legislation, such as:

■the Misrepresentation Act 1967, which provided a

remedy for a negligent misrepresentation;

■the Consumer Credit Act 1974, which by s 75 imposed

equal liability on credit card companies;

■the Unfair Contract Terms Act 1977, which controlled

the use of unfair exemption clauses;

■the Supply of Goods and Services Act 1982, which

provided that the supplier of services should exercise

reasonable care and skill.

2 Criminal penalties. Travel agents and tour oper-

ators are vulnerable to prosecution under the Consumer

Part 3Business transactions

410

■members of the public are often not aware of the exist-
ence of codes of practice and their rights under them;
■the sanctions which a trade association can impose
against a member for failing to comply with the code
are often very weak;
■codes are drawn up by a trade or industry and may
not adequately address the interests of consumers.
The EA 2002 requires the OFT to establish criteria for
approving codes and to allow a symbol to be used to
show which codes have been approved by the OFT.
A summary of the different approaches to consumer
protection is set out in Fig 14.2.
In the next part of this chapter we will examine how
the law is applied to protect consumers by considering a
consumer transaction which gives rise to a large number
of complaints: the package holiday.

Consumer protection case study

• package holidays

Over the past 30 years there has been an enormous growth
in the package holiday market. As the volume of trade has
increased, the real cost of taking a package holiday has
fallen. A package holiday to popular European destinations
such as Spain, Greece and Turkey is now well within the
financial resources of most people. Intense price com-
petition between the main tour operators has led to UK
holidaymakers enjoying the lowest prices in Europe, but
at the expense of standards. There is a high level of dis-
satisfaction with package holidays. In 2006/7 the Associ-
ation of British Travel Agents (ABTA) received 18,151
complaints about holidays and in 2007 Consumer Direct
received 14,391 complaints about holidays.

The problems with package holidays

1 A package holiday involves a complex set of legal rela-
tionships between the travel agent, tour operator,
hotelier, carrier and local suppliers of services. In most
cases, the tour operator does not own the airlines or
hotels but contracts with independent suppliers to
make up the package. Although the contract is usually
made in this country, most of the components of the
package are delivered abroad. The consumer may be
unsure who, exactly, is responsible if something goes
wrong and which country’s law applies.