Coming to grips with your travel agency’s technology contracts: Travel Weekly

Mark Pestronk

Q: Our agency has many technology contracts – not only a GDS contract but also lots more, including those for our accounting and reporting system, phone system, quality-control-checking system, auto-ticketing system, online credit card merchant system, online booking system, data-protection system, etc. It seems as if we are going to see more and more of these contracts as the travel agency business evolves. I have always found these contracts very one-sided, and I don’t know where to start in trying to make them less so. Any advice for me?

TO: Technology contracts are indeed almost always one-sided. They are also full of strange terms that few people other than lawyers can understand, like “non-sublicensable,” “consequential damages” and “waiver of subrogation.”

I don’t think that they are written this way on purpose. What has happened is that the first lawyers to draft such contracts used terminology from the Uniform Commercial Code that every state has adopted, and later drafters have imitated each other by using the same terminology again and again, even where it does not apply.

The first tip that I have for you is this: The contract probably does not even attempt to describe the features of the service that you are buying. If it doesn’t, you need to have the vendor add those descriptions as an addendum to the contract, along with a promise that the system will work according to those features. Typically, you can find them on the vendor’s website, so the contract should include the descriptions that you find there.

Second, if you have never used the system before, don’t let the vendor tie you up for a multiple-year term with no way for you to terminate the contract if you are dissatisfied. Ideally, the first contract that you have with a new vendor should allow you to terminate it on 30 or 60 days’ notice for any reason. If that is not acceptable, then try to limit the contract term to one or two years at the most.

On the other hand, if you have been doing business with the vendor for years or know of the vendor’s reputation for good service, then my advice is the opposite: Get as long a contract term as you can in order to protect against price increases, along with language protecting against price increases during the term.

Third, be wary of automatic renewal clauses. Most of my clients are probably unable to keep track of the dates by which they must give the vendor notice of nonrenewal, so they get stuck for another one- or multiple-year term. Unless you are one of the minority of business owners who can keep track of nonrenewal notice deadlines, you are probably better off without automatic renewals.

Fourth, try to get a “service-level agreement,” which is an addendum listing vendor response times to calls and emails with questions or complaints plus a right to terminate (or penalties on the vendor) if the vendor fails to meet the standards.

More Legal Briefs on GDS contracts:

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