To package or not to package that is the question?

Package holiday contracts benefit from the rights implied by the Package Travel and Linked Arrangements Regulations 2018.

Other consumer contracts which are not packages benefit from the rights implied by the Consumer Rights Act 2015.

In all consumer contracts the general obligation is fairness.  A term that is generally unfair to the consumer is likely to be unenforceable if relied upon by a business.

So what are the key differences?

Packages Non-Packages
Financial Protection Must be financially protected in the event of failure. This can costly and difficult to obtain. There is no obligation to financially protect (but you can if you want to.)
Assistance The organiser must provide assistance to customers whilst on holiday in the event of difficulty of any kind (even if caused by the consumer.) Reasonable fees can be charged for this assistance. There is no obligation to provide assistance.
Cancellation by the consumer in the event of unavoidable and extraordinary circumstances  A full refund should be provided to the consumer if they choose to cancel as a result of unavoidable and extraordinary circumstances at the destination. If the business remains able to perform their contracted arrangements there is no such obligation to allow cancellation with a full refund.
Cancellation or alteration by the business In both cases businesses would be obliged to provide a suitable alternative in the event of significant change and if this was unacceptable to the consumer they would need to refund. However, here are the key differences:
 

The organiser is liable to provide a refund of all elements of the booking irrespective of whether they obtain a refund from their suppliers.

The business is only liable for a fraction of the cost, there is no liability for anything other than the component booked.
The organiser can only cancel without payment of compensation if cancellation is due to unavailable and extraordinary circumstances or failure to reach minimum numbers. The business can cancel for any reason.
Liability  The organiser is liable if the consumer can show that they or their suppliers failed to use reasonable skill and care in the provision of the services contracted for. The business is only liable to the consumer if they failed to use reasonable skill and care in the provision of any services which are provided by them. For all other services the obligation is to use reasonable skill and care in the selection of their suppliers, if they have done that there is no further responsibility for the acts and/or omissions of the suppliers.

Selling package holidays certainly gives consumers significant protection and peace of mind and may encourage bookings in uncertain times.

The main problems for businesses are the difficulties in obtaining and paying for financial protection as well as issues with obtaining refunds from suppliers in the event that they have to provide a refund to the customer. Larger operators may be able to overcome these issues using their weight to pressurise their suppliers but smaller operators may end up in difficulties.

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If you have any queries about anything in this article please contact Becky Cackett (becky.cackett@mb-law.co.uk) or Claire Ingleby (claire.ingleby@mb-law.co.uk).

Please note this information is for general guidance only and is not intended to be a substitute for specific legal advice.

 

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