Hospitality Law Chapter 1

LECTURE NOTES – HOSPITALITY LAW How to Read/Answer a Case To understand a case you should attempt to identify four elements as you read it: (1) The facts; (2) the issue; (3) the decision; and (4) the reasoning supporting the decision. The facts are those circumstances that give rise to the lawsuit. The issue is the legal question that parties have asked the judge to resolve. The decision is the response to the issue. The reasoning is the basis and rationale for the decision. Introduction to the course Hospitality Law Definition, History and Coverage of Hospitality Law Law refers to a body of rules to which people must conform their conduct (a form of social control); it can also be defined as a set of rules used by the courts in deciding disputes. Basically it consists of rules enforceable in court requiring people to meet certain standards of conduct. Hospitality law came about in the 14th and 15th century when England innkeepers were believed to help robbers steal from guests. To counteract these illegal activities laws pertaining to inns and taverns were stringent and usually favored the guests. Another factor which contributed to the hospitality law was the limited number of inns and the relative monopoly enjoyed by the innkeeper. Hospitality Law covers a wide range of law applied primarily to restaurants, places that offer lodging to the public, travel agents and airlines. Much of this body of law also applies to recreational facilities such as health clubs, theaters, night clubs and sports facilities, to mention a few. The basic law is that hotel and restaurant owners must provide patrons a safe place in which to lodge or eat and the customers must act within acceptable bounds and pay for the services received. Example, the travel agent is to provide travel services and the responsibility of the traveler is to pay. Four main source of law are as follows: 1. 2 3. 4. Constitution Law Statutes (Statutory Law) Common Law Administrative Law The Legal System Common Law encompasses legal rules that evolved in England from decisions of Judges and from customs and practices, intended to be common or uniform for the entire English Kingdom, and obtaining their authority from the test of time. To some extent statutes and common law are intertwined. Sometimes statutes are ambiguously worded; if such a statute is relevant in a lawsuit the judge in the case will have to interpret the law (determine its meaning). The Judge’s decision in that case will become precedent for future cases. Statutory Law is law passed by legislatures (elected members of the law making body) Constitutional Law is the study of foundational or basic laws of nation states and other political organizations. Administrative Law is the body of law that governs the activities of administrative agencies. An administrative agency is a governmental subdivision charged with administering legislation that applies to a particular industry. These agencies include: departments, commissions, bureau, councils, divisions etc. The Role of the Judge The role of the judge in the legal system is to make the law in cases where no precedent or statute exists (common law) and interpret the law in cases where a statute applies. Some judges also review decisions of other judges. Classifications of Law There are numerous classifications of law. One classification is Civil and the other is Criminal Law. Difference between Civil and Criminal Classification of Law: 1. In a civil law a wrong usually is done to an individual whereas in a criminal law the wrong is considered to be done against society at large and involves violation of a criminal statute. 2. The objective of a civil lawsuit is compensation for an injury; the objective of a criminal case is punishment of the wrongdoer. 3. In a civil case, the party who commences the lawsuit is the injured person. The person’s name is included in the title of the case. A criminal case is undertaken by society and is usually referred to as “The state of….” or “The Commonwealth of …” 4. In a civil case the person who is suing hires and pays for his own Lawyer. In a criminal case, society is represented by a lawyer paid for by the Government and the name used is District Attorney or Prosecutor. Examples of Civil Law 1. Contracts: agreements between two or more parties that is enforceable in court. 2. Torts: violations of a legal duty by one person causing injury to another. Types of torts: Negligence: breach of a legal duty to act reasonably. Trademark infringement: use of another company’s business name or logo without permission. Fraud: an intentional untruthful statement made to induce reliance by another person. Remedies in Civil Cases 1. Damages (reimbursement for injuries) Types of damages: Compensatory damages refer to out of pocket expenses e.g. medical bills, lost wages, pain and suffering. Punitive/exemplary damages: refers to money over and above compensatory damages. Punitive damages are to a plaintiff not for reimbursement of loss but rather to punish or make an example of the defendant. They are awarded only in cases where the defendant’s wrongful acts are aggravated by violence, malice, fraud or similar wrong. E.g. of crimes: theft of services; assault; rape. Examples of Crimes Theft of services: the use of services such as a hotel room, with the intent of avoiding payment. Assault: intentionally causing physical injury to another person. Rape: forceful sexual intercourse against the victim’s will. Penalties in Criminal Cases Community Service Fines Probation Jail Death Journey of a Case through the courts 1. The parties and the proof (plaintiff and defendant) The parties to a lawsuit are the individuals in conflict, also referred to as litigants. A party may be a person, a business or a governmental body. The plaintiff is the party who initiates the lawsuit. The plaintiff usually has suffered an injury or loss and believes the defendant is responsible. The defendant is the party that the plaintiff has sued. 2. Commencing the lawsuit The complaint – document issued by the plaintiff which contains allegations. The summons – document ordering defendant to appear & defend allegations. Service of process – delivery of summons and complaint to the defendant. Responses to the complaint – file motion or file an answer to the complaint. Responses to the answer – plaintiff’s response to the defendant’s answer Summary judgment – the complaint, answer and reply (pleadings) 3. Pre-trial Procedure – filing of pleadings, availability of facts and evidence to both parties, preparation for trial, and in some cases settlement. 4. The trial – presentation of case as follows: Selection of the jury Opening statements Plaintiff’s case in chief Defendant’s case in chief Plaintiff’s case in rebuttal Summation Judge’s charge to the jury Jury deliberations The verdict The judgment 5. trial The appeal –complaint made by a litigant to a superior court that a judge committed an error and request that the superior court correct the error. Contracts A contract is an agreement between two or more parties that is enforceable in court. If one person fails to abide by the agreement, the other can sue in court. A contract can be in writing and signed or it can be oral. It can even be implied, which means it can come into existence without a word ever being written or spoken. Elements of a contract: 1. Contractual capacity: in order that a contract is valid there must be legal capacity to contract. That is, the ability to both understand the terms of the contract and appreciate that failure to perform its term can lead to legal liability including a lawsuit. According to the law, the following groups of people lack sufficient judgment or mental ability to appreciate fully the nature of contractual commitment and thus do not have the capacity to contract. This group include: minors (people under the age of 18); very intoxicated persons; and mentally incompetent persons. 2. Mutuality: all parties to the contract are interested in its terms and intend to enter an agreement to which they will be legally bound (one party has to make an offer and the other has to accept) An Offer is a proposal to do or give something of value in exchange for something else. The offer must be definite. If the terms are vague, a contract may not result. An Offerer is the person who makes an offer. An Offeree is the person to whom the offer is made. An Offer can be accepted, rejected or a counter offer made. An acceptance is an expression of agreement by the Offeree to the terms of the offer. A rejection is an expression of disagreement by the Offeree to the terms of the offer. A counter offer is a response to an offer that modifies one or more of its provision. It is not an acceptance, but rather it is treated as a new offer. 3. Legality: to be enforceable a contract must have a legal objective. If what the parties obligate themselves to do is illegal, the contract is void. 4. Consideration: there must be something of value exchanged for something else of value. Consideration can take one of three forms: 1. A tangible item or a promise to give such an item (food, money, etc.) 2. Performance or a promise to perform (cleaning, working etc.) 3. Forbearance or a promise to forbear (refraining from doing something you have a legal right to do) 5. Proper Form: the contract should be in a form in which it can be proven. The following contracts must be in writing to be enforceable: a. Contracts for purchase and sale or real property (land, buildings) b. Contracts that cannot be completed within a year from when they were made. c. ``Contracts made in consideration of marriage. d. Contracts to pay another person’s debt if that person fails to pay. 6. Genuine Assent: both parties must genuinely agree to the contract terms. A person who enters a contract due to fraud or innocent misrepresentation can avoid the contract. Misrepresentation and Fraud Fraud: an intentionally untruthful statement made for the purpose of misleading someone usually for the other’s gain. Innocent Misrepresentation: an untruthful statement that the speaker believes is accurate. Mistake: made in the process of negotiating and agreeing to the contract. Some mistakes have legal significance and other do not. Breach of Contract Breach of contract refers to failure to perform as required by a contract. Breach of contract is a civil wrong, not a criminal one. The non breaching party may be entitled to a remedy including damages of specific performance. Remedies for Breach of Contract: Compensatory damages: the sum of money necessary to cover loss incurred by the non-breaching party as a result of the breach. The breaching party must put the non breaching party in a position it would have been in had the contract been fully performed; they are not entitled to pain and suffering. A plaintiff seeking to collect damages for breach of contract must prove that the damages were foreseeable to the breaching party; and must prove to a reasonable certainty that he/she suffered a loss as a result of the breach. The plaintiff must also prove that he/she attempted to mitigate (reduce) its loss. Punitive damages: sum of money awarded to a plaintiff in excess of compensatory damages, the purpose of which is to punish the defendant. It is awarded only if the defendant’s actions are wanton or malicious. Specific Performance: a court order requiring the defendant to perform the act promised in the contract. Applicable only to contracts involving the sale of unique one-of-a-kind items such as a particular restaurant or a famous painting. Damages Allowed for Overbooking: The hotel reservation, once made and confirmed, is valid and bind the hotel to provide accommodations. The guest who is denied a room because the hotel has overbooked is entitled to collect compensatory damages. This would include payment of travel expenses associated with seeking and finding alternate lodging, telephone calls necessitated by the move, and other costs incurred in a particular case. The overbooked hotel should assist the guest in finding a room at a second hotel. Quantum meruit is a Latin phrase meaning "as much as he has deserved". In the context of contract law, it means something along the lines of "reasonable value of services". A party who performs a valuable service for another party usually enters into a written contract or agreement before performing the service. For instance, most professional roofers hired to repair a roof insist on having a formal agreement with the owner of the house before beginning the repairs. In the absence of an agreement or formal contract, the roofer may be unable to recover losses in court if the transaction goes awry. Quantum meruit is a judicial doctrine that allows a party to recover losses in the absence of an agreement or binding contract. Aspects of the Law of Torts Tort: a violation of a legal duty (a wrongful act) by one person that injures another. (Breaches of contractual duties are not considered torts). Tort is the law of civil wrongs. Tort law usually provides people with the rights to compensation when another person harms their legally protected interests. For instance, if somebody throws a ball and it accidentally hits a pedestrian in the eye, any costs of medical treatment and compensation for lost income during time off work could be paid by the person who threw the ball to the person who was hurt. Torts include: 1. Negligence: the breach of a legal duty to act reasonably that is the direct cause of injury to another. Negligence is carelessness that causes harm. Example, a hotel is negligent if it fails to fix a broken railing on steps. 2. Trademark infringement: use of another company’s business name or logo without permission. Example, a restaurant infringes a trademark if it adopts as its name the same name used by another restaurant in the same vicinity without the other restaurant’s approval. 3. Fraud: intentional untruthful statement made to induce reliance by another person. Example, if a resort represents in its advertising that it has a golf course and it does not. Negligence A person suing in negligence must prove four elements: a. Existence of a duty to act reasonably: hotels/restaurants do not owe everyone the duty to act reasonably. They owe the duty only to those people who would foreseeably be injured by their actions. If a hotel or restaurant cannot foresee a particular type of injury it does not owe a duty to protect patron against that injury even though someone is in fact injured. b. Breach of duty: to be liable for negligence the property must breach the duty to act reasonably to the plaintiff. E.g. a restaurant owes a duty to its customers not to serve rancid food because customers will foreseeably become ill. It if serves unhealthy food, the restaurant breaches the duty. c. Proximate cause: the direct and immediate foreseeable connection between a breach of duty and a resulting injury. The injury must have been caused by the breach of duty. d. Injury: to win a lawsuit a plaintiff must have suffered injury as a result of defendant’s breach of duty. The injury might be bodily harm, property damage, emotional or monetary loss. Duty: a responsibility imposed by law, the disregard for which can lead to liability. Liability: responsibility for a legal wrong, obligating the wrongdoer to compensate an injured party for the consequences of the wrongful conduct. The duty of care owed by a hotel or restaurant for the safety of its patrons depends on the legal status of the person injured. He may be an invitee, a licensee, or a trespasser. The greatest degree of care is owed to an invitee, the next greatest to a licensee and the least amount to a trespasser. Duty Owed to Invitees An invitee is someone who comes to an establishment for the purpose for which the business is open to the public, or for a purpose directly or indirectly connected with that business. The hotel or restaurant owes a duty to its invitees to reasonably inspect the premises for dangerous conditions and to exercise reasonable care to eliminate them. Duty Owed to Licensees A licensee is someone who has been given permission by the owner or occupier of a facility to enter or remain on the property but his presence does not further defendant’s business. The duty owed to such persons is twofold: (1) refrain from willfully injuring the licensee or acting in a manner to increase peril; and (2) warn of any latent dangers on the premises for which the property owner has knowledge. Duty Owed to Trespassers Trespasser: a person who enters a place without permission of the owner or occupier. If an employee who has been fired and ordered not to return to the hotel nonetheless enters the premises he is a trespasser. Someone who enters a restaurant after it is closed for the night without the owner’s permission is a trespasser. An owner does not owe a duty to safeguard a trespasser from injury due to conditions on the land. No special duty is owed to people who do not qualify as invitee, licensee or trespasser. No duty is owed on property not owned or maintained by the Hospitality Facility. A hotel or restaurant is generally not liable for injuries that occur to patrons on property not owned or maintained by it, even if the property is near the hotel or restaurant facility.