Advisers are agents for cruise lines, except when they aren’t

Q: In a recent column, “Cruise lines free to favor some agencies with better pricing” (April 18), you wrote that “the cruise lines uniformly hold that a travel agency is actually not an agent of the line.” However, in another column, “Agents sometimes need to inform suppliers about a client” (April 11), you wrote, “to the extent that a travel agency acts as an agent for the cruise line,” the agency has certain duties to the cruise line. So are we an agent of the cruise line, or aren’t we?

A: Let’s figure it out together. Under the law of agency, “Agency is the fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.” The agent then has the power to bind the principal.

In other words, the principal must consent to having the agent act on the principal’s behalf; the agent must consent to the relationship and to being controlled by the principal with respect to the actions taken on the principal’s behalf; and the agent must have the ability to bind the principal. Let’s call this the “consent-control-bind” standard.

The legal term “fiduciary” in the definition means that the agent must act for the principal’s benefit in matters dealing with the agency relationship. It doesn’t really add much to our understanding because the agent is acting on the principal’s behalf by definition.

The legal standard that I have quoted goes on to say something very significant: “Whether a relationship is characterized as agency in an agreement between parties or in the context of industry or popular usage is not controlling.” So just because a contract states that an agency is not an agent of a supplier such as a cruise line, it does not necessarily follow that it isn’t. Conversely, calling an agency an agent does not make it an agent.

Now let’s apply our consent-control-bind standard to the travel agency industry, and let’s disregard what any written agreement states. When a travel agent makes a booking in the GDS, the supplier has obviously consented to having the agency book on its behalf, the supplier controls the booking terms and the agency is obviously binding the principal to a contract with the client.

Therefore, a GDS booking passes the consent-control-bind standard, which means that a travel agency is the agent for every supplier that can be booked in the GDS. Since some cruise lines can be so booked, it follows that the travel agency is the agent for the cruise line, at least insofar as GDS bookings.

On the other hand, when a travel agency calls or emails a supplier, the travel agency is merely requesting a booking, which does not become a contract until the supplier itself consents. So in those cases, the travel agency is not an agent of the supplier, but only an agent of the client.

It may seem paradoxical that a travel agency can be an agent for some bookings and not others for the same supplier, but that is the law.