Keeping contracts up with the times

Mark Pestronk

Q: Our agency’s standard corporate account contracts do not seem to be keeping up with the times. Specifically, our corporate clients keep requesting new kinds of services that aren’t covered by our contracts, so we have no fees for them. They seem disinclined to pay new or higher fees, so we appear to be stuck with long-term contracts that don’t allow us to charge new fees or raise the fees we have. Any suggestions?

A: Your problem is a fairly common one these days because corporate travel management is becoming more sophisticated. Corporate travel managers are demanding new services that only agencies can provide, and agencies need to procure new bells and whistles to meet those demands.

My first suggestion is to review your existing contracts because what you can charge now depends on what the agreement provides. For example, the most typical travel management company (TMC) agreement has a list of services and a list of fees. If the former list does not contain the new service desired by the client, then you need to propose an amendment to cover the new service and the new fee, and the client is free to accept or reject it.

If the client accepts it, then you could draft a simple amendment adding a description of the service, the fee and the manner of payment. If the service is not on a per-transaction basis, you can’t charge the fee at the point of sale (as you can with a ticket), so you probably need invoicing and billing terms in the amendment.

Another approach is to propose a blanket amendment now for all of your corporate accounts stating that, if the client wants a service beyond what you now provide, you will propose a new fee, which the client may accept. You could also provide that the exact service and fee arrangement may be finalized by an exchange of emails.

A hard question sometimes arises where the new work required may or may not be part of your existing list of services, depending on the contract’s wording and the client’s interpretation. One example is an NDC booking, for which you may well want to charge a higher fee because of the mid- and back-office challenges it poses. If your fee list has a fee for “airline reservations,” the client may object to your proposing to charge more for what the client sees as the same thing. In that case, you may have to propose an amendment clarifying the difference.

The most difficult situation arises if your corporate account contract expressly or implicitly promises unlimited services in return for a single fee per transaction or a fixed management fee. If you have one of these contracts, you may well be stuck, unless you can terminate the contract without breaching it.

For new contracts, the best possible approach may be to provide a clause expressly stating that new or different services will have other fees and that you will propose a fee, which the client is free to accept or reject. 

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