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HOSPITALITY LAW ON CONTRACTS
Transcript of HOSPITALITY LAW ON CONTRACTS
E. ENFORCEABLE CONTRACT
Art. 1305 of the Civil Code of the Philippines defines contract as "meeting of minds between two persons whereby one binds himself with respect to the others, to give something or to render something.
- meeting of minds between two contracting parties which takes place when an offer by one party is accepted by the other
- legally enforceable agreement between two parties, in w/c one agrees to perform accdg. to the terms of the agreement
B. IMPORTANCE OF CONTRACT
Contracts are used in the hospitality industry to govern the many different promises and business transactions entered into on a daily basis
C. KINDS/CLASSIFICATION OF CONTRACT
Generally speaking it is preferred over verbal contracts because:
a. easier to clearly establish the responsibilities of each party when those responsibilities are spelled out
b. time can cause memories to fade, business people may change jobs or retire
In the hospitality industry most transactions w/ guests are established orally, rather than in writing.
- agreement of the will of one contracting party with that of another upon the object and terms of the contract
- the subject matter of the contract
- sometimes known as "prestation" or the conduct to be observed y the debtor
- it may be things, rights, and services
1. must be w/n the commerce of man
2. must not be impossible (physically or legally)
3. must be determinate as to their kind
- must be transmissible
1. must not be contrary to law, morals, good customs, public order, or public policy
2.must not be impossible
3. must be determinate as to its kind
D. ESSENTIAL REQUISITES OF CONTRACTS
3. Cause of the Contract
the essential or more proximate purpose w/c the contracting parties have in view at the time of entering into the contract
* In the Anglo-American or Common Law, Cause is called "Consideration".
- recognize as valid by the courts and subject to the court's ability to compel compliance w/ its terms
COMPONENTS OF ENFORCEABLE CONTRACT
- the payment exchange for the promise contained in a conflict
- a proposal to perform an act or to pay an amount that if accepted, constitute a valid contract
- a proposal made by one party to another to enter into a contract
- must not violate any laws in order to be enforceable
- unconditional agreement to the precise terms and conditions of an offer
In the hospitality industry, legal acceptance may be established in a variety of ways:
1. Verbal or non-verbal agreement
2. Acceptance of deposit
3. Acceptance of partial or full payment
4. Agreement in writing
F. COMMON HOSPITALITY CONTRACT
1. Franchise Agreement
- the owner of hospitality industry agrees to operate that facility in a specific manner in exchange for a franchise
2. Management Contracts
- created when the owner of the hospitality facility allows another party to assume the day-to-day operation of that facility
3. Group Rooms Contract
- developed when an individual or organization requires a large number of hotel rooms.
4.Convention or Meeting Space Contract
- developed when large hotel had been requested by a state association to provide sleeping rooms, and meeting space
5. Purchasing Agreements
- covers even the simplest tasks
- its between a trusted employee or vendor who is trusted to provide quality products or services
G. ESTABLISHING AN EFFECTIVE RESERVATION POLICY
The hospitality industry is different from many other businesses because of the highly perishable nature of its product.
A hotel room that had been reserved on a given night can never be sold on that night again. The solution to the problem is an "effective reservation policy".
A contract to provide a reservation in which the provider guarantees the guest's reservation will be honored until a mutually agreeable time.
The primary provider guarantees the guest reservation will be honored regardless of time of arrival, but the guest will be charged if he or she no-shows the reservation. Prepayment or payment authorization is required
The provider provide a confirmed reservation where no prepayment or authorization is required.
H. ESSENTIAL HOSPITALITY CONTRACT CLAUSES
- areas or terms of the agreement that should be clearly spelled out to ensure that both parties to the contract understand them completely
The reason for including these clauses is to prevent ambiguity and misunderstanding.
Essential Clauses for Providing Products and Services
Length of time that contract price terms are in existence.
Identification of is authorize to modify the contract.
Deposit and cancellation policies.
-refers to the downward variance that may be permitted in a contract before some type of penalty is incurred on part of the guest.
ATTRITION - reduction in the number of projected guests or attendees
Indemnification for damages
to reimburse for a loss already incurred
Performance standard related to quantity
- actual number exceed the original estimate
Clauses for Receiving Products and Services
Delivery or start date
- refer to the quality of products or services received
Licenses and permits
- authorized by law
Dispute resolution terms
EXCULPATORY CLAUSES OR CONTRACT
- unenforceable illegal contract clause whereby one party conditions the offer on the other party's waiver of legal rights related to the contract
- a clause that releases one of the parties from liability for their wrong doings
BREACH OF CONTRACT
- failure to keep the promises or agreements of a contract
The best way for managers to prevent a breach of contract is by thoroughly
understanding their rights and obligations under the contract
taking the necessary steps to fulfill those requirements