Dawn Crowell Murphy
Dawn Crowell Murphy is a senior associate with Pillsbury Winthrop Shaw Pittman LLP in Washington, DC.
Before you sign your next contract with a meeting facility, pay special attention to provisions regarding attendee attrition, cancellation, contingencies, and liability. The wrong language can land your association in legal trouble.
It may seem as though contracts with meeting facilities are nothing but standard legalese, but they address important issues. To protect your organization and facilitate a successful event, be sure to assess these key provisions when reviewing event contracts.
If you're booking years in advance, you probably won't be able to anticipate all the circumstances that might affect attendance. Consider building in a provision that allows you to update the number of attendees or room block, or reduce it by a certain percentage, at various intervals. The contract might also allow for a "minimum guarantee" that is less than the estimated room block (for example, 80 percent); attrition penalties would apply only if your organization does not meet the minimum.
Some facilities impose burdensome cancellation penalties. You might negotiate to reduce them, including by requiring mitigation by the facility (ideally based on historic average usage or other baseline, rather than 100 percent occupancy). Or the facility might waive the penalty if you schedule another event within a certain period. Also consider what happens if the facility cancels its obligations to you, in whole or in part. Will the facility be obligated to pay damages, or will it be required to provide accommodations and cover costs of rebooking elsewhere? Cancellation penalties are usually waived if a "force majeure" occurs (an unanticipated event out of the parties' control, such as a natural disaster), so you might negotiate a broad definition of that term, including conflicting competitive meetings and business impracticability.
When the commitment to use one meeting facility, such as a hotel, depends on the simultaneous availability of another facility, such as a convention center, the contract should reflect that. If one facility becomes unavailable, the obligation to use the other should be lifted. Contracts can make the same allowance for other factors affecting the viability of an event, such as grant funding.
Typically, each party should accept liability for the elements of the event that it controls (for example, your organization is responsible for programming, and the facility owner is responsible for the facility itself) and should indemnify the other against liability from those elements. Generally, you should avoid accepting liability for the actions of people you do not control, but often facilities will require you to cover damages caused by your contractors or attendees. Require that your contractors indemnify you and carry their own insurance, naming your organization (and the facility, as appropriate) as an additional insured. On top of comprehensive general liability insurance, consider what additional or special coverage you may need for your event, such as umbrella or vehicle coverage.
[This article was originally published in the Associations Now print edition, titled "Make Your Best Meeting Contract."]