A guest slipped on a wet deck on a chartered riverboat and got hurt. You would expect the claim to land on the company that owned the boat. It landed on the tour operator who booked the trip instead, and that operator’s insurance refused to pay. One clause in the charter contract did all of that, and the operator had signed it without reading it closely.
A few clauses in any supplier contract decide who absorbs the loss when a trip goes wrong. Indemnification is one. Force majeure is another. The damages and deadline terms sitting near them matter just as much. You read past all of it, because you are looking for the deposit, the headcount, and the cancellation dates. The supplier sends fifteen pages, you scan for the numbers, you sign. The clauses that decide who pays when something breaks are in the paragraphs you skipped.
Jeff Ment has been litigating travel contract disputes for more than thirty years. His firm represents operators from one-person businesses to Tauck, Abercrombie and Kent, G Adventures, and Intrepid. The contract that gets his clients in trouble is almost never one that was badly written. It is an ordinary contract nobody read before signing.
The indemnification clause that boomerangs liability back to you
Indemnification is a promise to cover someone else’s claims. When a supplier indemnifies you, you are protected. When you indemnify the supplier, you are the one who pays. The whole question is which direction the promise runs.
On the riverboat, it ran the wrong way. An operator chartered a European riverboat for a week through a leasing company. A different, much larger company actually owned the boat. Buried in the charter contract was a line saying that the operator, as subcharterer, would cover the boat’s owner against any claim for passenger injury. And every passenger on board counted as the subcharterer’s passenger. So when a guest fell, the claim came straight back to the operator. Ment’s firm sent it to the leasing company, expecting the boat owner’s insurer to take it. The leasing company sent it right back, pointing at that clause. The operator turned to their own insurer, who said no, because the policy did not cover incidents on a boat. The operator was left holding a claim from an accident on someone else’s deck, with no insurance behind them.
So read for direction. When a supplier hands you an indemnification clause that runs from you to them, you have three options: refuse it, renegotiate it, or at the very least confirm your own insurance will actually pay out on whatever you are about to promise. A lot of liability policies will not cover indemnity you took on voluntarily in a contract, and a lot of travel policies exclude boats, watercraft, and whole categories of transport. Reading those exclusions is part of reading the indemnification clause.
Force majeure protects the supplier’s location, not yours
An operator in Ohio could not get a group to Key West because a state of emergency had closed the roads at home. The Key West hotel kept the deposit anyway. The reason was in the force majeure clause, which only counted events in the city where the hotel was. Key West weather was fine. The hotel was open. The operator lost the whole deposit and the group lost the trip.
Force majeure clauses are not all the same, and the difference decides who absorbs a loss like that one. A clause that only counts events in the supplier’s city protects the supplier and leaves you exposed. A clause that counts anything stopping either side from traveling protects you both. So check the geography first. Then check the remedy: is it a refund, a credit, a rebooking, or some mix tied to “documented unrecoverable expenses,” and what is that phrase actually allowed to include.
“Force majeure said you could only have a force majeure event in the city where the hotel is located. Key West had no force majeure event.”
Jeff Ment
When force majeure does not apply, three other doctrines sometimes do. Impossibility, impracticability, and commercial frustration all cover situations where performing the contract is technically possible but commercially absurd, or where some unforeseen event has wrecked the whole point of the deal. One operator running a school group booked 55 students into a hotel, and two days before arrival the hotel pushed them out because the National Guard had extended its stay. Force majeure did not help, because a hotel could have seen the Guard overstaying coming. Impracticability had a real argument: no court expects a hotel to evict a Guard unit on two days’ notice just to seat a student group.
If you want this kind of protection, you can have a clause added that names impossibility and impracticability directly, so you are not depending on force majeure alone.
Aligning your customer terms with the supplier’s clock
Say a hotel lets you release unsold space up to 45 days before the trip. Set your own customer deadline at 50 days, not 45. Those five days are what let you drop space before the hotel’s window closes. Set your customer deadline level with the hotel’s, or later, and you can end up paying attrition penalties out of your own pocket, because you left yourself no time to move.
The same backward math runs through cancellation, attrition, and deposit timing. Take every supplier contract, start from its deadlines, and set your customer-facing dates earlier than that. Watch the time zones if the supplier is overseas. Midnight at a Tokyo hotel is the previous afternoon for you, and a customer deadline set without that math can lapse a day before you think it does.
Group bookings are the other half of this. When one person books for seven friends, you may never speak to the other six. If that group leader never passes your terms and conditions along, one of those six travelers can still bring a claim against you. So put an indemnification clause in your contract with the group leader: if they failed to share the terms, claims from their group come back to them, not to you.
Independent contractors after the federal reset
If you use guides, drivers, or trip leaders as independent contractors, the federal test for that classification has shifted. It now leans on two questions: how much control you have over the work, and whether the contractor has a real shot at profit or loss. The broader six-factor test the last administration was building has been pulled back, which makes classification a little safer for now. State law still rules, though, and it differs from state to state.
If your guides work abroad, put a line in the IC agreement where the guide states they hold whatever license that country requires. This matters most in places that take guide licensing seriously, like Italy and Japan. That written statement is what moves the liability onto the guide if it turns out they were not properly licensed. A US governing-law clause will not override another country’s licensing rules, but it does keep any dispute between you and the guide in your home courts.
If you are thinking about moving a long-time contractor onto payroll, run the numbers before you assume staying with a contractor is cheaper. Payroll tax, workers’ comp, and PTO are real costs. So is a misclassification ruling, and so is the limit on how much you are allowed to direct a true contractor’s work. An employment attorney in your state can pressure-test the classification for any specific role.
What you catch by reading the contract first
None of these clauses are hard to find once you know to look. The indemnification paragraph pointing the wrong way. The force majeure clause that covers the supplier’s city and not your group. The customer deadline that left you no time to drop space. The IC agreement that never asked a foreign guide to prove a license. You can catch every one of them before you sign, and fixing them in the draft costs a fraction of fixing them in a lawsuit.
Treat a supplier contract as a page of prices and dates and you will keep absorbing surprises an attorney would have caught in fifteen minutes. Read it instead for the direction of indemnification, the reach of force majeure, the meaning of the damages terms, and the deadlines that have to beat the supplier’s clock, and you will sign far fewer contracts you come to regret.
This is one of two ways legal trouble reaches operators out of nowhere. The other does not wait for a contract at all. It shows up as a lawsuit over your own website: How Tour Operator Websites Are Getting Sued Without Doing Anything Wrong.
About Jeff Ment
Jeff Ment is the founder of The Ment Law Group, the country’s largest travel law firm. He counsels travel companies on liability defense, compliance, contracts, risk management, and IATA and ARC matters. His firm’s clients span from one-person travel businesses to some of the largest names in the industry. Jeff brings more than 35 years of industry experience to the work, including earlier roles as a travel agent, tour guide, and airline sales manager. The Ment Law Group has offices in Hartford, Westport, and New York City.
To learn more from Jeff’s work in travel law, visit The Ment Law Group.
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