Daniel Santiago is a contract specialist at ITA Group. With a focus on hotel, DMC and ancillary supplier contracting, he navigates clients through the legal lifecycle of an event, reviewing thousands of contracts annually.
4 Key Provisions to Incorporate Into Your Future Event and Meeting Contracts
Everyone is anxious to start replacing Zoom calls with face-to-face interactions and making personal connections once again. When that time comes, will you be ready to hit the ground running and plan and execute event experiences that will not only engage but leave attendees motivated and inspired? Now more than ever, ITA Group’s legal team is working to ensure our clients are protected by mitigating risk with well-executed hotel contracts.
We’ve put together the following four focus areas critical to creating a strong contract that protects client interests to every extent possible.
1. Force Majeure Clauses in Contracts
These days, we all seem to know a little of the French language. That’s because no clause has become more relevant these past months than force majeure.
While it has always been necessary to include language surrounding acts of God and occurrences beyond either party’s control, how do we address and ensure the dynamic nature of current events are appropriately contracted?
Travel advisories, shelter-in-place orders and governmental regulations — which include group restrictions, mask utilization and social distancing — all play a major role in determining the likelihood of an event's operation and success. Each program will dictate a tailored approach, but force majeure events like a disease outbreak, governmental regulations and pandemics should be the focus of any planner contracting within the next 12 to 18 months. Parties should also consider incorporating timelines for execution, as this will serve to mitigate the subjective nature of interpretation in the midst of a crisis. Lastly, force majeure language should always be mutual and allow for full cancellation (not rescheduling) and a timely refund of all deposits.
Pro Tip: There are cases where a force majeure event may not require full cancellation. Parties should consider verbiage which addresses partial performance due to a percentage of participants being unable to attend. Should the client choose to continue on anyway, stipulate language to the effect of the hotel will not charge damage fees for any short-fall in performance. As the alternative is a full termination for cause, this is advantageous to both parties.
Used as a separate clause from force majeure, the inclusion of COVID-19 language can help address the heightened concern for contracting and traveling in the midst of a pandemic. This clause should reflect specific contingency plans, cancellation/rebooking verbiage and destination details directly related to the coronavirus.
The rationale for a unique and separate clause is to protect the integrity of the standard force majeure language.
Only a few short years ago, zika virus was at the forefront of all contract negotiations. While COVID-19 takes its place today, parties risk limiting their ability to execute force majeure by becoming too granular. As the notion of force majeure is a future event outside the control or knowledge of either party, the language should allow for unrestrained interpretation.
Pro Tip: This clause is no substitute for well-crafted force majeure terms.
In response to the pandemic, all major hotel brands have put in place extensive safety and health procedures to ensure reduced liability for their clients and attendees. However, there is still an inherent risk of negligently causing a participant injury, sickness or death in connection with the event.
A strong, mutual indemnification clause is important to allocate risk in a way that is commercially practicable for both parties.
For example, if a participant finds reason to sue both the hotel and the client, but it is reasonably determined this issue came in the exclusive control of one party, said party would be obligated to handle the legal defense and cover all losses and expenses incurred pursuant to the indemnity.
Pro Tip: Mutual indemnities shift potential costs from one party to the other in the event compensation is necessary for losses arising out of or in connection with the agreement.
2. Revisit and Revise Emergency Plans
In 2019, an industry survey found that a number of meeting planner respondents were not very concerned about security issues and natural disasters (13 percent); and, a majority didn’t have a written security/natural disaster preparedness plan in place (72 percent).
Today’s pandemic all but guarantees this mentality is finished. All hotels are routinely revising their safety procedures as pandemic guidelines evolve. Every contract should require the hotel has an emergency plan. The plan should address multiple crisis scenarios as well as detailed procedures in place to provide a healthy environment such as sanitizing stations, social distancing markers, etc.
Pro Tip: The emergency plans should also include actions that the hotel will take to resolve emergency situations, communicate to attendees and help to mitigate any further risk.
3. Convey Event Purpose
Why are you bringing this group of people together for this event? It’s important for your contract to include this information.
If you intend to travel where the purpose of that event is tied to something that can only take place at a specific time/place within that city, but travel restrictions (either with that city, state, country or even internal client restrictions) make that impossible, you should not be liable for that event.
For example, if a party contracted to hold an event at a venue, and the venue is not able to host the event due to COVID-19, the contracting party’s purpose has been frustrated and delayed performance will not resolve the frustration (i.e., because the event has passed).
Pro Tip: This clause will require a conversation with your contracting partners to make sure everyone is clear about what is (and is not) covered.
4. Comply with Evolving Legal, Safety and Health Requirements
As applicable laws, ordinances, codes and regulations continue to change, hotels should contractually acknowledge their duty of care provided under common law. This includes executing reasonable steps related to assuring safety and comfort, adequate training to its employees on established health and sanitation guidelines and processes, and designating an employee from the hotel as a liaison for biweekly communication and updates. Language should also be included to address the party responsible for additional costs surrounding compliance.
This article originally appeared on ITA Group. Read more here.