The other day, I sent an email to Mark Pestronk regarding a blanket E&O Insurance policy and the protection or coverage it offers to an RTA. This is self explanatory.
February 22, 2008
Hi Mark--
Someone asked me a question and I had no clue and thought you might know.
A client books a trip with an RTA or Independent Contractor and something goes horribly wrong and they sue the "agency". Where does the liability fall? I know YTB says they have a blanket E&O policy for their 140K agents. I am sure their website disclaims liability. I am sure they would say the RTA is an independent business and disclaim liability. So, where does the liability ball fall? Does it make a difference if the transaction is completed by the client online by themselves? Or does liability shift if the RTA sells and processes it by themselves. It just seems to be such a grey area and one that is untested to date.
Any thoughts?
Hope all is well.
John
and the reply....
February 27, 2008
John:
It is not a gray area, really.
Liability for negligence or breach of contract falls only on the IC, not on the host. As a practical matter, the host will get sued anyway, as the consumer and his attorney cannot tell the difference.
Insurance does not affect my answer one way or the other. If the host's insurance covers the IC, it does not follow that the host has liability to the consumer.
Finally, the website disclaimer tends to deter suits against the party or parties named in the disclaimer. Again, it does not affect liability for negligence of breach of contract if something goes horribly wrong.
Mark
Law Offices of Mark Pestronk, P.C.
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Phone: (202) 833-1900
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