Marc Pestronk

Q: Our agency has many technology contracts – not only a GDS contract but also many others, including those for our accounting and reporting system, our telephone system, our quality control system, our automatic ticketing system, our online credit card merchant system, our online reservations. system, data protection system, etc. It looks like we’re going to see more and more of these contracts as the travel agency industry evolves. I’ve always found these contracts very one-sided, and I don’t know where to start to try to make them less. Any advice for me?

A: Technology contracts are almost always one-sided. They’re also full of weird terms that few people other than attorneys can understand, like “not sublicensable,” “consequential damages,” and “waiver of subrogation.”

I don’t think they’re written that way on purpose. What happened was that the first lawyers to write such contracts used the terminology of the Uniform Commercial Code that each state adopted, and later drafters followed suit using the same terminology over and over again, even where it does not apply.

The first piece of advice I have for you is this: the contract probably doesn’t even attempt to describe the features of the service you’re purchasing. If not, you should ask the vendor to add these descriptions as an addendum to the contract, along with a promise that the system will operate in accordance with these features. Typically, you can find them on the provider’s website, so the contract should include the descriptions you find there.

Second, if you’ve never used the system before, don’t let the provider tie you down for years with no way for you to terminate the contract if you’re not satisfied. Ideally, the first contract you have with a new supplier should allow you to terminate it with 30 or 60 days notice for any reason. If this is not acceptable, try to limit the duration of the contract to one or two years at most.

On the other hand, if you’ve been dealing with the supplier for years or know the supplier’s reputation for good service, then my advice is the opposite: get as long a contract term as possible to protect yourself. against price increases, as well as wording protecting against price increases during the term of the mandate.

Third, beware of auto-renewal clauses. Most of my clients are probably unable to keep track of when they have to give the seller notice of non-renewal, so they’re locked in for another term of one or more years. Unless you’re in the minority of business owners who can track non-renewal notice periods, you’re probably better off not renewing automatically.

Fourth, try to get a “service level agreement”, which is an endorsement listing the provider’s response times to calls and emails with questions or complaints, along with a right of termination (or penalties for the supplier) if the supplier does not meet the standards.

More legal notes on GDS contracts:


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