When a Montenegrin hotel commits rooms to a tour operator for a season, the parties usually negotiate three things — the number of beds, the rate, and the release deadline — and take the rest from whichever template the agency uses. That is a reasonable commercial instinct and a poor legal one, because Montenegrin law has already written most of the contract.
The Obligations Act contains a named contract type for this arrangement: the contract on engagement of hospitality capacity, expressly labelled the allotment contract. It supplies default terms on duration, price changes, commission, equal treatment, release of unsold beds and withdrawal — and it makes the whole agreement void if it is not in writing.
Article numbers below are from the Zakon o obligacionim odnosima, chain "Službeni list Crne Gore" br. 047/08 of 07.08.2008, 004/11, 022/17 of 03.04.2017 and 123/24, read on 5 September 2026. General information about Montenegrin law, not advice on a particular contract.
What the Act says the contract is
Article 982(1) defines the bargain from both sides.
The hospitality operator undertakes, over a defined period, to place at the travel agency's disposal a defined number of beds in a defined facility; to provide hospitality services to the persons the agency sends; and to pay the agency a commission.
The travel agency undertakes to endeavour to fill those beds — or to notify, within the fixed deadlines, that it is unable to — and to pay the price of the services provided where it has used the engaged capacity.
Article 982(2) supplies the term the parties most often leave out: unless the contract provides otherwise, the accommodation capacity is deemed placed at the agency's disposal for one year.
Article 983 is the provision to check before anything else. The allotment contract must be concluded in writing, and a contract not concluded in writing is null and void. Not unenforceable, not voidable — void. A season arranged by email exchange and telephone confirmation, without a written contract, is not an allotment contract at law, and neither party can rely on the regime below.
What the agency must do
Article 984(1) obliges the agency to keep the operator informed of the progress of filling the capacity.
Article 984(2) governs the moment that matters. Where the agency cannot fill all the engaged capacity, it must — within the agreed or usual deadlines — notify the operator, deliver the guest list, and state the deadline until which the operator may freely dispose of the engaged capacity.
Article 984(3) then attaches a consequence that operators should read carefully: capacity not marked as filled in the guest list is deemed free from the day the hotel receives that list, for the period the list covers. The release is automatic on receipt; it does not wait for a separate confirmation.
Article 984(4) balances it: after the deadline in the notification expires, the agency regains the right to fill the engaged capacity.
Article 985 prohibits the agency from charging the persons it sends higher prices for hospitality services than those provided in the allotment contract or in the operator's price list. The agency's margin therefore has to come from the commission in Article 991, not from a mark-up on the room.
Article 986(1) sets the payment default: unless otherwise agreed, the agency pays the operator the price of the services performed after the services have been performed. Article 986(2) gives the operator a right to require an appropriate advance — which is a statutory entitlement rather than something that must be negotiated in.
Article 987 requires the agency to issue each person it sends a special written document. That document is made out in the name of a person or a defined group, is non-transferable, and contains an instruction to the operator to provide the services listed in it. It serves as proof that the person is a client of the agency that concluded the allotment contract, and it is the basis on which mutual claims between the agency and the operator are settled.
For an operator, that makes the voucher the accounting document as well as the admission document. Services provided to someone who arrives without one are not covered by the settlement mechanism the Act contemplates.
What the operator must do
Article 988(1) describes the operator's commitment in unusually strong terms: it assumes a final and irrevocable obligation to place the agreed number of beds at disposal over the period and to provide the persons the agency sends with the services listed in the special written document.
Article 988(2) draws the obvious consequence and states it expressly: the operator may not contract with another travel agency for capacity already reserved under an allotment contract. Overbooking across two agencies is not a commercial risk to be managed; it is a breach of an express prohibition.
Article 989 imposes equal treatment. The operator must provide the persons sent by the agency with services on the same terms as the persons with whom it has contracted directly. A hotel that gives its direct bookings the better rooms, the better board or the earlier check-in is not simply managing yield; it is departing from Article 989.
Article 990 constrains pricing, and the periods are long:
- the operator cannot change agreed prices unless it notifies the agency at least six months in advance — except where a change in currency exchange rates affects the agreed price;
- new prices may be applied only after one month has expired from their delivery to the agency;
- new prices do not apply to services for which a guest list has already been delivered;
- and price changes have no effect on reservations the operator has confirmed.
Taken together, those four rules mean a mid-season repricing is effectively unavailable against an agency that has already delivered its lists and holds confirmations.
Article 991 makes the commission a statutory obligation of the operator rather than a negotiated concession: the operator must pay the agency commission on the turnover achieved under the allotment contract, determined as a percentage of the price of the hospitality services performed. Where the contract does not fix the percentage, the agency is entitled to the commission determined by its own general business terms or, failing those, by business custom.
An operator that signs an allotment contract silent on commission has not avoided paying it. It has agreed to a rate set by the counterparty's standard terms.
Getting out
Article 992 governs the agency's release rights, and it distinguishes two situations.
The agency may temporarily withdraw from using the engaged capacity without terminating the contract and without owing the operator damages, provided it sends the notice of withdrawal within the agreed deadline. Where the contract fixes no deadline, Article 992(2) sets it by business custom in the hospitality sector — which means an unwritten deadline is decided later, by evidence about market practice, rather than by the parties.
Where the notice is not sent within the deadline, Article 992(3) entitles the operator to damages. And Article 992(4) allows the agency to withdraw from the contract in its entirety without any obligation to compensate, provided the notice is sent within the agreed deadline.
Article 993 is the counterweight, and it is the clause an operator should be asking for. The contract may provide a special obligation on the agency to fill the engaged capacity. Where it does and the agency fails, the agency must pay the operator compensation per unused bed per day — and, under Article 993(3), the agency has no right to cancel the contract by timely notice, either in part or in whole.
That is the difference between a release-back allotment and a guarantee. Without an Article 993 clause, the agency's exposure for empty beds is nil provided it gives notice in time. With one, the beds are paid for and the release mechanism in Article 992 is switched off.
Who signs it in a condo-hotel
One question sits underneath the chapter in any resort held in units. The obligations in Articles 988 to 991 fall on the hospitality operator, not on the owners of the rooms — so in a condo-hotel or rental-pool structure the allotment contract is signed by the operating company, and it commits beds the operator does not own.
That makes two documents have to agree with each other. The management agreement between the owners and the operator has to permit the operator to give the final and irrevocable commitment Article 988(1) describes, for the periods and at the rates the allotment contract fixes. Where it does not, the operator is promising an agency something it cannot deliver without the owners — and the same structure carries the guest-property exposure we set out in a hotel's liability for guests' property.
The default position, in one table
| Question | What the Act supplies if the contract is silent | Provision |
|---|---|---|
| Duration | One year | Art. 982(2) |
| Form | Written, or the contract is void | Art. 983 |
| Unsold beds | Deemed free from the day the hotel receives the guest list | Art. 984(3) |
| Agency's pricing to guests | No more than the contract or the operator's price list | Art. 985 |
| When the agency pays | After the services are performed; operator may require an advance | Art. 986 |
| Exclusivity of committed beds | Operator may not re-commit them to another agency | Art. 988(2) |
| Treatment of the agency's guests | Same terms as direct guests | Art. 989 |
| Price increases | Six months' notice, effective one month after delivery, not against delivered lists or confirmed reservations | Art. 990 |
| Commission | Payable; rate from the agency's general terms, failing that business custom | Art. 991 |
| Release deadline | Set by business custom in hospitality | Art. 992(2) |
| Empty beds | No compensation unless a fill obligation is agreed | Arts. 992, 993 |
What is actually worth negotiating
Reading the table backwards gives the drafting agenda, because the terms worth fixing are the ones the Act leaves open or resolves against the party that did not think about them.
The release deadline in Article 992 is the single most valuable term for an operator, because in its absence the answer comes from business custom — established after the dispute has arisen, by evidence about what the market does. Fixing it in the contract converts an evidential question into a date.
The commission percentage under Article 991 is the equivalent for the same reason in reverse: silence hands the rate to the agency's own general terms.
The fill obligation under Article 993 is the only mechanism in the chapter that makes an agency pay for beds it does not sell, and it has to be written in.
And the duration, which defaults to a year under Article 982(2), is worth stating explicitly wherever the commitment is meant to be seasonal rather than annual.
Everything else — the written form, the void sanction, the equal treatment duty, the six-month price notice, the prohibition on re-committing beds — applies whether or not the contract mentions it, and cannot be improved by using a template drafted for another jurisdiction.
If your hotel or resort in Montenegro contracts with tour operators, our hotel investment work covers the allotment terms and the operating structure behind them, and corporate law covers the commercial agreements alongside them.
