978-1418051914 Chapter 13 Solution Manual

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Travel Agents and Airlines—Rights and Liabilities ■145

■Foreign citizenship alone cannot constitute notice of a driver’s incompetence.

■Renting to a person under age 25, without more concerns, does not constitute negligent entrust-

ment, nor does negligent entrustment apply where a car-rental company had intended but failed

to place the renter on a “Do Not Rent” list.

❊Rental of a car known to be defective.

❊Unauthorized drivers.

■A problem that car-rental companies often confront is the use of the rented vehicle by unautho-

rized drivers.

■Authorized operators include the lessee and anyone else the rental company approves in writing.

Everyone else is an unauthorized driver.

■If a traveler rents a car and allows a friend to drive who has not been approved by the rental com-

pany, the friend is an unauthorized driver.

■If the friend is in an accident with the car, the rental company will not be liable for resulting

injuries and the rental company’s insurance will not cover the collision. The traveler who rented

the car will be liable to the rental company for damage to the car.

■Travelers who rent cars can avoid these problems by ensuring the rental cars are driven only by

authorized drivers.

■A valet is not an authorized driver even though he parks a rental car with the permission of the

authorized driver.

❊Age discrimination with car rentals.

■The law in some states upholds the right of a rental company to refuse to rent to people under

age 25.

■The law in other states prevents car-rental companies from refusing to rent a car to someone who

is at least 18 years of age, provided insurance coverage is available.

■Most such states provide that any additional insurance costs imposed because of the age of the

driver can be passed on to the driver.

L. Answers to Case Example Questions

13-8-1. Why do you think the law relieves an airline from liability for breach of contract when

a flight is canceled due to weather conditions?

While it is true in a cancellation situation that the airline is not performing its contractual

duty to provide air transportation at a specified time, the airline’s concern is not just

13-9-1. Why does a pilot need the authority to remove passengers from a flight?

The pilot is charged with the safety of the passengers and crew aboard the aircraft. Often the

13-10-1. Why do you think the pilot was entitled to rely on statements from the crew “without

further inquiry”?

The pilot was entitled to rely on statements from the crew without further inquiry because

13-11-1. What should the airline have done in this case to minimize the loss to the plaintiff?

The airline should have made arrangements for the plaintiff on another airline to make it to

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13-13-1. What should Tribeca Travel Agency have done to avoid liability?

The time change was relayed by computer to Tribeca from the airlines 10 days before the tickets

13-13-2. What could Continental Airlines have done to avoid liability?

13-13-3. Why do you think Tribeca Travel Agency was ordered to pay more than Continental

Airlines?

Tribeca prepared the tickets for the plaintiffs. It had the information about the changed times

13-15-1. On what principle did the court base its decision?

13-15-2. Based on the court’s holding, how does the liability of a tour operator for a guest’s

safety compare with that of an innkeeper?

An innkeeper has a duty to exercise reasonable care for the safety of guests. A tour operator

Key Terms

Agency A relationship in which one person (the

Agent A person authorized by a principal to act on

Errors and omissions insurance Covers travel

Negligent entrustment Providing a product for use

Principal A person who authorizes an agent to

Tariff A rule or condition of air travel that binds

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Travel Agents and Airlines—Rights and Liabilities ■147

M. Answers to End-of-Chapter Questions

❊Review Questions

1. Name the four groups that compose the travel industry.

2. What differentiates Small Claims Court from other courts?

Two main factors differentiate small claims courts from others. First, small claims courts have

3. If an agent acts with authority for a principal, who is legally bound by the acts of the

agent?

4. What is the difference between an agent and an independent contractor?

An agent acts for and binds another (the principal) based on authority voluntarily given by the

5. What is a tariff?

6. What is an airline’s responsibility when it takes custody of a passenger’s luggage?

7. What should be included on the baggage check an airline gives to a client on an inter-

national flight?

The baggage check should include a reference to the Warsaw Convention and should state

8. What two treaties have bound the United States and other countries on matters

involving international plane flights? Which is in effect now?

The treaties are the Warsaw Convention and the Montreal Convention. The Montreal Con-

vention, signed in 1999, will replace the Warsaw Convention system, once the Montreal

9. What treaty binds the United States and other countries on matters involving inter-

national plane flights?

10. Why should a travel agent be familiar with the places he recommends?

11. What is a disclaimer and how do the courts treat them?

A disclaimer is a clause in a contract that attempts to relieve a party from liability. Courts do

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12. What obligation, if any, does an airline have to passengers when it cancels a flight due

to bad weather?

An airline that cancels a flight due to inclement weather must assist passengers in locating

13. Under what circumstances can a pilot remove a person from a plane and refuse to

provide her transportation?

If a pilot has reason to believe the continued presence of a passenger would or might be harm-

ful to the safety of the flight, the pilot has the authority to remove such passenger from the

14. What is the consequence of a person representing himself as an authorized agent when

in fact the “agent” has not been authorized by the principal to act?

If the agent has not been authorized to act by the principal, the acts of the agent do not bind

15. What is errors and omissions insurance?

Errors and omissions insurance is a type of insurance coverage that protects a business person

16. What laws protect the rights of disabled passengers?

17. What is negligent entrustment?

❊Discussion Questions

1. How does small claims court increase the potential liability of the travel industry?

Many plaintiffs who might otherwise be discouraged from suing because of lawyer’s fees and

2. How does one distinguish between an agent and an independent contractor?

An agent acts at the direction of a principal, often uses tools and equipment provided by the

principal, is usually paid a salary, and works during hours set by the principal. The work of an

independent contractor is not under the direction of anyone else except as to the outcome;

3. Why does the Warsaw Convention require that a passenger have notice of its provisions?

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Travel Agents and Airlines—Rights and Liabilities ■149

4. What do you think is the policy reason supporting class action lawsuits? How do they

increase the potential liability of the travel industry?

The policy supporting class action lawsuits is because of the numerous amounts of people

5. A travel agent has made arrangements through a travel wholesaler for a client’s tour.

The wholesaler fails to make hotel reservations and as a result the client must stay in an

inferior hotel. Is the travel agent liable? Why or why not?

The travel agent contracted with the client to provide a certain level of service. If the service is

6. How might airport security checks be modified to ensure that passengers and their

carry-on luggage do not become separated?

7. Identify at least five enhanced safety precautions airlines have recently adopted.

Some of the enhanced safety precautions airlines have recently adopted are: multiple iden-

tification checks to occur at the ticket counter and the departure gates; training pilots

❊Application Questions

1. Theresa is a pilot for ABC Airlines. Does either Theresa or the airline qualify as a princi-

pal or an agent? If so, which qualifies as which? Why?

2. Melanie contracted with a travel agent for the purchase of a charter trip to England. The

travel agent made the necessary arrangements with the charter company. The agent

recommended a one-day side trip, which the client agreed to purchase. While the client

was on the side trip, she was injured because a step on the company’s bus was rusted.

Further, the airline overbooked the client’s return flight, which resulted in a two-day

delay in the client’s arrival home. What potential liability, if any, does the travel agent

have in these circumstances?

A court might conclude that the travel agent breached a contract with Melanie to provide air

transportation when the airline was unable to accommodate her. The agent would be liable

for damages and could sue the airline for reimbursement. The travel agent would be liable for

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3. Salvatore had confirmed reservations on a flight from New York City to Boston. The

airline overbooked the flight. How should the airline determine whether or not

Salvatore will get bumped? Why should it use that method?

The airline should first ask for volunteers who will agree to wait for a later flight, usually in

4. Tyrone was struck by a car while jogging on the sidewalk. The car was a rental car.

Under what theory might Tyrone attempt to hold the car-rental company liable

for his injuries? What would he need to prove to establish his case? How could he

prove that?

The theory on which Tyrone might sue the rental company is negligent entrustment, which

means providing a product (in this case, a car) for use by another person knowing that the per-

son is likely to use the car in a dangerous manner. To establish a case for negligent entrust-

ment, Tyrone must prove that the rental company had reason to know that the driver of the

5. Ariel and Jeremy were passengers on a plane that was about to take off. They were loud

and rowdy, and were overheard to say “This is the big one.” Passengers in adjoining

rows became alarmed and summoned the flight attendant. She asked Ariel and Jeremy

to settle down and they became angry and more boisterous. What rights do the atten-

dant and the pilot have in this circumstance? Why?

If anyone on the plane seeks to jeopardize the safety of the passengers, by hijacking, terrorist

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