Mark Pestronk
Q: In your May 27, 2024, Legal Briefs column ("Who will inherit your business?"), you covered what happens to the client list of an independent contractor who dies suddenly. This was helpful, because our agency hosts many aging baby boomers who entered the business 40 or more years ago. What about their work in progress? If an IC dies, what is our legal duty as the host to manage the existing bookings for future travel? Do we have the right to assign the bookings to another IC or take them in-house? Are the IC's heirs entitled to a commission split?
A: Remember that the host-IC relationship is one between two independent businesses. That means that you find the answers in the contract between the parties, and, if there is no contract or the contract is silent on the point, there is no answer in the law.
Ideally the host-IC contract would expressly cover what happens to the bookings as well as the commission split. For example, the agreement could provide that if the IC is unable to work on existing bookings for future travel, the host can take over the bookings and assign an employee or another IC to handle client and supplier communications, such as changes. You could then provide for a regular or reduced commission split or none at all, depending on what the parties agreed to in the contract.
If the contract doesn't cover the point or if there is no contract, and if the IC is a corporation, limited liability company or partnership that had a surviving employee or partner, the legal entity would have the right and obligation to continue to handle the bookings. As a practical matter, there may be no need to change the work or the commission split.
If the IC is a sole proprietor and the contract is silent on what happens in the case of death, or if there is no contract, there are no relevant legal duties. You can simply do nothing, leaving the client to fend for himself or herself, leading to supplier cancellations for missing payment deadlines.
Of course, doing nothing could lead to claims and even lawsuits against your agency, even if they have no legal basis. Most clients probably assume that your agency is responsible for the booking, just as you would be if the IC had been your employee.
To avoid such an outcome, you could take over the bookings as a gesture of goodwill, or you could tell the client to find another travel advisor to take over, if it isn't too late. Your business judgment, not the law, would dictate what happens.
If you take over a deceased sole proprietor's bookings, the executor of the IC's estate may expect a commission share to be paid to the estate. However, in the absence of a contract providing for such payment, there is probably no legal basis for the claim, unless the estate laws of the IC's state provide otherwise.
When in doubt, consult a knowledgeable attorney.