Eileen Morgan Johnson, CAE
Eileen Morgan Johnson, CAE, is a partner with Whiteford, Taylor & Preston LLP, in Washington, DC. She is cochair of the firm’s Associations, Nonprofits, and Political Organizations Section.
As the pandemic begins to wane, associations and their members are eager to get back to in-person conferences. But organizations should heed the lessons of 2020 as they look ahead to future venue contracts and other legal issues related to meetings and events.
In the year since the onset of the COVID-19 pandemic, every association has faced the question whether to continue, postpone, or cancel an in-person meeting or choose some virtual or hybrid alternative. In making these decisions, they have confronted a complex array of contract issues that were never the focus of negotiations, but which may have threatened the organization’s financial stability if a provision were deemed breached. Even more important has been the focus on the safety of attendees for meetings that were held. At the same time, associations also had to try to meet exhibitor and vendor needs, as well as address technology and insurance issues.
The situation remains uncertain for the remainder of 2021 and possibly 2022. While the vaccine rollout has accelerated, distribution remains uneven, and it is unclear how effective current vaccines may be against variants. Meanwhile, it is difficult to predict what restrictions different states and localities may apply to large gatherings and whether attendees will be willing and able to return to in-person meetings anytime soon. Experience tells us that associations should plan for pandemic restrictions and precautions to continue in some form indefinitely.
For existing meeting contracts, the strategy remains the same. If you want to proceed, you can work with the hotel to reduce meeting size requirements and focus on safety issues, usually without penalty. Alternatively, you can negotiate to reschedule for a future year and try to apply all or most of any deposit. Unilateral cancellation is always the highest-risk option. When possible, explore whether the dates when room blocks may be reduced or when cancellation penalties increase can be pushed later so you will have more time to make a final decision.
Given current circumstances, no future meeting contract should be signed without clauses to protect the association if pandemic-related cancellations or changes are needed. Pay particular attention to state or locality orders, as well as guidance from the hospitality industry and the Centers for Disease Control and Prevention. In selecting a venue, you may wish to have the flexibility to proceed in a state that has been more aggressive in staying open. Alternatively, you may want the possible protection to postpone or cancel in a state that is likely to continue to have broad restrictions on large gatherings.
The best language for meeting contracts should specifically allow the association to cancel if the pandemic or any other force majeure event may 'materially affect' the meeting as originally planned.
Every new meeting contract should have a force majeure clause that will allow you to cancel the event without penalty depending on the future course of the pandemic or the occurrence of other events that cannot be anticipated, such as civil unrest, natural disasters, and strikes. Force majeure clauses that are triggered only if an event is “impossible” always should be stricken or explicitly qualified by using phrases like “commercially impracticable” or specifying a minimum percentage of projected attendees who are planning or willing to attend (such as 70 percent). The best language should specifically allow the association to cancel if the pandemic or any other force majeure event may “materially affect” the meeting as originally planned.
Other clauses should allow the association to
The event contract should clearly state which party is responsible for providing a safe venue. In most cases, the venue should be responsible for placing signage to ensure safe foot-traffic flow, providing hand sanitizer, sanitizing and setting up rooms to maintain social distancing in accordance with local government mandates and preferably CDC guidelines, and ensuring that staff comply with safety protocols. The association might take responsibility for checking attendees before they enter the venue to ensure that they have no recent virus exposure and do not have a fever, and might want to make face masks, gloves, and additional hand sanitizers available.
The association may ask attendees to sign a waiver in which they acknowledge the potential danger from the virus, agree to follow all safety protocols, and release the organization from liability should they contract the virus. The waiver should clearly state that an attendee who refuses to sign it—or who signs but then fails to comply with the protocols—will be denied admission (or asked to leave), and then state the association’s refund policy.
Some associations plan to ask for verification that attendees have received a COVID vaccine. This will most likely not be practical as a screen for attendees until summer, and it may impose obligations on associations to offer alternatives to individuals who cannot meet the vaccine requirement due to a disability.
Registration materials should clearly state that attendees are advised to obtain travel insurance to cover their travel expenses should the in-person meeting be canceled or if the attendee is unable to travel. Associations have handled the question of what to do with the registration fee in such circumstances in different ways. Some have offered a full refund. Others have offered a refund minus an administrative fee, while some organizations have allowed the attendee to apply the registration fee to a future conference. Whatever approach you take, be sure that it is clearly stated in the registration materials.
In exhibitor and vendor agreements, the association should have broad discretion to postpone or cancel the event without any penalty or cost, and to decide whether to return deposits or apply them to a future meeting. The association should not be responsible for covering the exhibitors’ or vendors’ costs to ship materials to the venue, equipment to stage the event, or travel expenses.
The agreement should also specify what options, if any, the exhibitor will have to participate in a virtual exhibit hall if an in-person meeting must convert to a hybrid or virtual event. While the software platforms have improved and some exhibitors can effectively showcase their products and services in a virtual exhibit hall, not all exhibitors will be comfortable with that option, and some may want to negotiate a reduced fee in that circumstance.
The agreement should also specify what options, if any, the exhibitor will have to participate in a virtual exhibit hall if an in-person meeting must convert to a hybrid or virtual event.
Licenses for virtual conference platforms should clearly state what services the vendor will provide, the capacity for each event hosted on the platform, and which party is responsible for providing technical assistance to attendees, exhibitors, and speakers. If the vendor will have access to personally identifiable information of anyone gaining access to the virtual event, the association’s usual contract terms for data privacy should be included, and the association should be fully indemnified and protected for any breach attributable to the vendor.
Event cancellation insurance remains important for a wide variety of force majeure events, even though coverage for the pandemic and other communicable diseases is not currently available. If you may still be planning to cancel an event for which you previously purchased pandemic coverage, or if you ever cancel a future meeting for any other reason, it is important to explain to your broker or carrier why your cancellation is not voluntary. If possible, your release and termination agreements should list reasons and use language from your policy that will trigger coverage.
Also bear in mind that your policy may not cover the full extent of your room block attrition damages if there is a dispute with the hotel over the cancellation. If the amounts are substantial in relation to the projected revenues and expenses on which your coverage limits otherwise will be based, you should ask your broker for an alternate quote to include the full attrition amount. For example, if your projected revenue is $500,000 and projected expenses are $450,000, but your room block guarantee is $750,000, the larger amount generally will not be covered if claimed by the hotel unless requested in your application.
Finally, event cancellation coverage is now available for virtual events to cover issues such as technology breakdowns or the failure of a key speaker to appear.
General liability Insurance is also critical to cover accidents at in-person meetings, even though COVID-19-related claims are generally being excluded from new policies. Associations should also insist on being named as an additional insured in exhibitor and vendor agreements.