Tourism and Hospitality Legal Aspects

Introduction

Today, hospitality managers are required not only to understand the day to day operation of their operation but the legal aspect of hospitality management. Barth (2008) states that It can be said that the actions of the hospitality manager will determine whether the business become the subject of litigation. The legal judicial system is a main system that regulates almost every part of the society, including tourism and hospitality industry. When one transacts with another, that person is essentially contracting with the other party. Law, in this sense, helps to safeguard the rights and obligations that these two contracting parties are entitled to. Without a properly functioning legal system, the society will flounder and people will be reluctant to enter into transactions with each other for fear of ending up with the shorter end of the stick. The tourism and hospitality industry is closely interlinked with the legal system. Business organizations such as hotels, agencies and restaurants rely on common law when dealing with each other. Law also comes into play when businesses interact with customers through the provision of goods and services. For example, restaurants have the legal obligation to ensure that the foods they offer to customers are safe to consume and the premises are not a fire hazard to occupants.

In this report, we will be looking at three topics. The first topic is the legal and regulatory framework. The second is the Legal responsibilities of hospitality operator to guests. The final topic is the consumer protection.

These topics will be discussed in relation to the case as illustrated in the “case scenario” section of the report as a form of illustration and in the context of hospitality and tourism.

For the first seminar, I will talk about the legal and regulatory framework.

Seminar one: The Legal and Regulatory Framework

Case Scenario Seminar one:

Mr. Lee is an executive of a big company from America. He came to Singapore to attend a business convention in 2009. He would be staying in G Hotel in Singapore for two nights. Feeling sore from wearing the expensive diamond ring, he left the ring on the drawer in the hotel room. When he came back to the hotel room, he was shocked to find out that the ring on the drawer was missing and proceed to call the duty manager and housekeeper to demand an explanation. The housekeeper insisted that he would not clean the room without first notifying Mr. Lee as it is part of the Hotel standard operating procedure. Mr. Lee was very angry and said he is not interested in the excuse and would definitely sue the hotel for negligence demanding a compensation of $15,000.

First of all, before the explanation of Mr. Lee’s case scenario, it is essential to know that the Common Law has been in existence since a thousand years ago. These principles of law have been applied to almost all areas in the old British Empire. Many countries still employ the common law with slight alterations subjected to local customs and practices. There are two branches to Common Law. These branches consist of Criminal Law and Civil Law. Criminal law seeks to identify certain behavior as criminal and punish those whose behavior is, according to that definition, criminal.

If Mr. Lee established that the loss of the ring is due to the theft by the staff of the Hotel, he may report to the police in which the case will be dealt by Criminal Law. The relationship is between the state and the criminal which the state seeks to punish. In doing so, the state is essentially protecting its citizens from undesirable behavior and the state takes on the responsibilities for the detention, prosecution and punishment of the offenders.

If Mr. Lee established that the loss of the ring is due to the negligence of the hotel, he may than try to seek compensation by going to the courts in which the case will be dealt with by Civil Law. In Civil Law, the relationship is more likely to be between the hotel and Mr. Lee rather than with the state. Furthermore, Civil Law seeks to achieve redress, remedy and compensation for the aggrieved party namely Mr. Lee as judged by the court of law, not punishment. Individuals are responsible for the enforcement of civil law. The state’s role in this case is merely to provide the procedure and courts necessary to resolve the disputes. Law of Contract and Law of Tort are the predominant themes in civil law. In contract law, generally two or more persons come together to form an agreement. There is an offer, an acceptance and an intention to be legally bound by the contract. When there is a breach of the contract, the two parties will go to court over the breaking of the agreement. Thereafter, remedies will be awarded to the person judged to be aggrieved, whereby the quantum awarded will be compensatory and not punitive. It is good to know that Contract law is not in effect in this case scenario.

In contrast, in Tort, there may not be any agreements between the hotel and Mr. Lee. Mr. Lee suffers loss and/or damage due to the actions or inactions of the Hotel. In the law of tort, one person has committed a civil wrong against the party. A general theme surrounding the law of Tort is the concept of negligence. As long as Mr. Lee can establish that the Hotel committing the tort was negligent, he may be entitled to compensation.

In conclusion, Mr. Lee may use the means of Civil Law and the law of tort to claim compensation. The court involved is likely to be Small Claim Tribunal as the amount is $20,000.

Seminar two: Legal responsibilities of hospitality operator to guests

Case Scenario 2:

Mr Chiam Lai Hock has been a loyal and hardworking employee to the Hamilton Hotel in Orchard Road for the past thirty-five years. He has developed a good command of the English language and has stood by the main door of the hotel for the last twenty years. However, a recent stroke has left him with a limp in his right leg. After his return, his service has been relatively slower. The service manager of Hamilton Hotel, Mr Randolph, felt that Mr Chiam will incur additional medical expense to the company as he is aging and working slower day by day. Hence, Mr Randolph wanted to fire him. One fine day, Mr Chiam fell and broke his leg while opening the door of a limousine. Mr Randolph refused to pay his medical fees and fired Mr Chiam after this. Mr Chiam felt that this was in breach of his employment contract and that he has been unfairly discriminated by the company because of his age. Mr Chiam wants to sue the hotel for his medical fees and unfair dismissal. In a parting shot to the hotel, Mr Chiam obtained a detailed listing and private information of all high value customers of Hamilton hotel and passed them to his new employer, Broadway Inn Hotel.

Pursuant to the Article 12 of the Singapore constitution, all persons are equal before the law and that there shall be no discrimination on the appointment of persons to “any office or employment under a public authority”. However, Hamilton Hotel is a private employer; hence it does not come within the ambit of this article. Even though age, sex, racial discrimination is frown upon with respect to employment, the law is silent on this area for now. It will be better for Mr Chiam to sue under breach of contract to claim his medical fees which are terms stipulated in his employment contract.

If Mr Chiam decides to sue for breach of contract, he will need to prove to the courts that his employment contract clearly provides that any injury suffered in the line of duty will be reimbursable by the company and that he is entitled to continue his employment upon recovery. If successful, Mr Chiam will be able to claim his medical expenses per the terms stated in the employment contract.

Also, Mr Chiam can sue the Hamilton Hotel under the law of tort. It is implicitly implied that the employer owes a duty of care to his employees in respect of the employment. In the event of any negligence by the hotel, for example, slippery floors during a rain, Mr Chiam can sue the Hotel for not providing a safe environment to employees.

Mr Chiam is also protected by several statutes legislated by the Singapore government. As he is a manual laborer for Hamilton Hotel, he is protected under the Employment Act. Section 4(3) of the Retirement Age Act provides that if a person is unlawfully forced to retire on the ground of age, the employer will be found guilty of the breach of this act. If Mr Chiam is earning less than $1,600 a month, he will be able to sue the hotel under the provisions of the Workmen’s Compensation Act. He will only need to proof that he was accidentally injured in the course of his employment.

The hotel in turn can escape from liability if it can show that the injury suffered by Mr Chiam was not incurred in the line of service for the hotel. The onus of proof lies with the hotel to show this. Also, the hotel should closely scrutinize the employment contract to see whether it provides for medical fee reimbursement and the quantum reimbursable for injuries suffered in the course of employment.

Finally, relating to the stealing of sensitive customer information and passing them to his new employer, Mr Chiam is risking that he will be sued under both criminal law and civil law. Stealing by itself is a criminal act and he may be sued under criminal law for that. Moreover, Mr Chiam can also be sued under contract for passing private highly confidential information to a competitor. Mr Chiam has breached his duty to act with good faith and fidelity to his ex-employer, Hamilton Hotel.

Seminar three: Consumer Protection

Case Scenario Seminar three:

Mr. Ali heard about the latest promotion at the food and beverage outlet in a hotel which claims that they offered Halal chicken chop made from chicken reared in Japan at half the price. The advertisement is very attractive as it showed the serving of the chicken chop to be so large till it almost covered the whole plate. Mr. Ali, feeling hungry on seeing the advertisement went to the outlet on the hotel to order the chicken chop for his dinner. Subsequently, the chicken chop was served and to his surprise, the chicken chop is only about the size of a quarter of the plate and not almost full plate as the advertisement had shown. Feeling not very happy, he ate the entire chicken chop and left the outlet. Half an hour later, he felt pain in his stomach and went to a clinic for treatment. He was told that it might be due to food poisoning from the chicken chop. In addition he was told that there are no Halal certifications of the Chicken reared in Japan. Ali is very angry and decides to sue the hotel for compensation.

First of all, before the explanation of Mr. Ali’s case scenario, it is good to know that consumer interests such as Mr. Ali’s are protected through both contract law and acts of parliament. This shall be further elaborated in the following paragraphs. The normal principles of contract law will apply in consumer protection as well. The onus is on the consumer to show that there is a proper formation of the contract with an offer, acceptance, consideration and an intention to be legally bound by the law. Also, the consumer needs to establish that there are no vitiating factors to the contract. Finally, the burden of proof is on the consumer to find evidence to support claims that the counterparty has breached the contract. Mr. Ali in this case would need to show that the chicken chop is much smaller than suggested and that the chicken chop is not Halal and also that it is not properly prepared.

The Food and Beverage outlet which is the seller of the chicken chop to Mr. Ali in this case is subjected to the Sale of Goods Act imposes various legal obligations on the seller. For example, under Section 13, when there is a contract for the sale of goods by description, there is an implied term that the goods will correspond to the description. This means that the outlet should not put an advertisement which does not describe the actual size of the chicken chop. Also it should not claim the food to be Halal when it is not. This implies it is not satisfactory as in Section 14(2) further provides that when the seller is selling the goods in the ordinary course of business, it is an implied term that the goods supplied will be of satisfactory quality.

Last but not least, the chicken chop is not properly prepared as shown in the food poisoning of Mr. Ali. This is high lighted in Section 14(2B) clarifies on certain factors that might make a good unsatisfactory. These factors include the appearance and finishing of the goods, safety of the goods in use and the durability of the goods. Finally, Section 14(3) states that the goods must fit the purpose for which the goods are bought for. At times, the seller might include a term in the contract stating that goods sold are not refundable. In this situation, the Unfair Contract Terms Act Section 6(2) provides that any clause trying to prevent liability for breach of Section 13, 14 and 15 is invalid. Hence, consumers are protected from these unfair disclaimers and liability exclusions.

In conclusion, Mr. Ali could sue the outlet in the hotel for compensation for the inaccurate information provided on the advertisement and also the inability of the seller, namely the outlet in the hotel.

Conclusion

Therefore, one can see that the hospitality and tourism industry is closely interlinked and regulated by law. The legal system provides for a fair and equitable environment in which the industry can operate in. employment laws, consumer protection laws, contract law and the law of tort helps to ensure that both the seller and the buyer of goods and services are insulated from unfair, illegal and unsafe practices. Knowledge of these legal principles will aid industry operators in understanding the legal obligations imposed on them and thus avoid unnecessary and costly litigation.

References

Andrew Phang,2004, Basic Principles of Singapore Business Law, Cengage Learning Asia

B. Pettet/H. Rajak,1998, The Law of Business Organizations, The London School of Economics and Political Science

Ibp Usa, 2004, Singapore Business Law Handbook, International Business Publications USA

Ravi Chandran,2006, Introduction to Business Law in Singapore, 3rd Edition, McGraw Hill Education.

Stephen C. Barth, 2008, Hospitality Law: Managing Legal Issues in the Hospitality Industry, Wiley