October Monthly Meeting Hosted by Marriott Newton.

October Monthly Meeting

Hosted by Marriott Newton

Tonight’s Program:CEU Credits Domain: BProject Management, Skill 5.02 Manage Contracts1.5 Clock Hours

Learning Objectives:Acquire new strategies to effectively identify and negotiate changes to complex and confusing provisions in legal contracts

Identify business versus legal issues in an agreement, and understand how to most efficiently utilize legal counsel

Enhance your knowledge of the overall structure and provisions in venue rental agreements

Learn how to approach the contract review process with a renewed outlook

Tonight’s ExpertATTORNEY: JOSHUA M. BOWMAN, JDPartner, law firm of Sherin and Lodgen and chair of the firm's Hospitality Practice Group

Tonight’s ExpertPLANNER:NANCY MANZON D’ERCOLE, CMPSenior ManagerMeeting & Event ServicesBright Horizons Children’s Centers, LLC

Topics• Parties & Signature Pages• Details and Deposits• Attrition and Cancellation• Force Majeure• Access – Equipment Utilities• Indemnification• Default• Con-Compete• Construction • Other Issues

Parties & Signature PagesCheck/confirm:• Each contract party is an entity, not a natural person (unless Flatley)• Entity type at end of name: “Corp., Inc., LLC, LP, P.C.”• “Signature blocks” (most important)• Signatory is duly authorized. If no rep, write in “duly authorized”• Signatory’s title. LLCs often have “Managers”• Model Signature Block:

ABC, LLC, a Massachusetts limited liability

By:______________

Joe Planner, Manager

Duly Authorized

Include Specific Details• When in doubt, include it in the agreement (Murphy’s Rule)• Move-in / move out times• Areas of hotels/convention center(s) by name• Room type and price per room type; get guarantee of room type• Beware of:

“The Hotel does not guarantee specific room type availability” or similar language.

Deposits• Large up front deposits give the venue more leverage• Negotiate staggered payments and periods where deposits are

refundable

Attrition / Minimums• Many venues make planners “guarantee” revenue, (although they

don’t guarantee room type)• Minimums often apply to rooms and food and beverage (F&B) sales• Less popular venues have less leverage and vice versa• Attrition / Deposit / Cancellation Fees / Force Majeure / Default are

related• Planners want minimums to apply to entire event (not per night)• General rule: set minimum at 80% of anticipated revenue; high

demand venues might want 90%

Cancellation Fees• Make sure cancellation fees are the venue’s “sole and exclusive

remedy”• Cancellation fees should be “liquidated damages.”• Penalties are illegal in Massachusetts• No fees for F&B until 60 days out• Venue obligated to mitigate its damages (i.e., book another group)• Cancellation fees reduced by the amount venue can recover• Beware of “last sale basis” clauses (your rooms are deemed last

sold)• Negotiate sliding scale fee schedule - include actual amounts

Cancellation Clause“In the event that the Group cancels the Event prior to the arrival date noted above, the Group agrees to pay to the Hotel a cancellation fee, as liquidated damages and not as a penalty. In this event, the Hotel shall undertake reasonable efforts to resell rooms and function space and will credit those revenues against the Cancellation Fee.”

Payment of Late Fees• Negotiate more time (30 days) after event for final

payment • Late fees shouldn’t apply to amounts subject to a good

faith dispute• Beware of compounding interest and fee shifting

Force Majeure• Be judicious about “picking fights”• Most people don’t understand them• Ideally, they are narrowly drafted• They often cover situations outside a party’s “reasonable control”• Should never cover situations that can be fixed by a party spending

$• Can’t go on for ever; termination right• Ideally, planner can terminate• Beware of obligation to take alternate date or alternate space; “or

else” pay cancellation fee• If you go forward, look for “just and equitable adjustment” in fees

Narrow Force MajeureFORCE MAJEURE. If either party fails to perform an obligation hereunder, which failure results from delay due to acts of God, governmental restrictions, enemy action or terrorism, but excluding causes attributable to economic conditions or the lack of funds of either party (a “Force Majeure Event”), the amount of time for performance of such obligation shall be extended by the amount of such time performance is delayed by reason of such Force Majeure Event. Notwithstanding the foregoing, if a Force Majeure Event lasts more than thirty (30) days, either party may terminate this Agreement immediately by providing written notice to the other party. In the event either party terminates this Agreement due to a Force Majeure Event, the venue owner will return the Deposit to the planner and it shall not be a default of this agreement. Each party shall, in each instance thereof, exercise reasonable diligence to effect performance when and as soon as possible or practicable.

Access• Ensure all access rights are included• Include exclusive areas as well as common areas like bathrooms,

loading docks, freight elevators, decks, parking garages, etc.• Extend access rights extend to your:

– Agents, employees, invitees, contractors, suppliers and vendors• If needed, include provision allowing you to close event to public

and/or sell tickets

Equipment / Utilities• Cover AC, heat, lighting, restrooms, security, janitorial services,

audio visual services & parking• Determine what costs are included or excluded? • Understand if certain vendors need to be used and costs• Don’t assume venue will do anything

General Pointers• Review rules and regulations up front• Make vendors subject to rules and regulations• Get “special permission” for storage, smoking, alcohol and music• Educate yourself on taxes and charges• Do not use the name of the venue without permission• Understand assumption of risk and “as is” disclaimers• Negotiate limits if possible (damage to common areas must be

proved; get time to pay), but don’t blow up deal

Indemnification• Makes party responsible for claims brought by “third parties” against

other party• Venue typically wants to be indemnified by planner from loss, cost

and expense arising from event• What about venue’s insurance? Make each party is obligated to

carry insurance• Always ask for reciprocity (slip and fall may be venue’s fault)• Should only cover personal injury and property damage (insurable

events)• Indemnification includes defense costs – but make sure attorney’s

fees are “reasonable”

Indemnification• Planner’s indemnification obligation should be limited to the extent

of available insurance• Ask for indemnitee to “look first” to applicable insurance (fallback)• Make sure “consequential damages” are waived (i.e., no “lost

profits”)• Make Indemnitee notify indemnitor in writing promptly (insurance

issue)• Indemnitee can’t bar insurance protection or prejudice case• Indemnitor needs sole right to prosecute case with counsel of its

choice (insurance issue)

Indemnification• Indemnitee should not be indemnified for its own bad acts (acts,

negligence, gross negligence)• Gross negligence v. negligence v. “acts and omissions”• Comparative negligence v. contributory negligence (“to extent”)• Look for mutual waiver of subrogation• Planner should be indemnified for ADA issues• Indemnitor should have personal liability excluded• Indemnification should cover owners, employees, affiliates, etc.

Model Indemnification Clause “Indemnitor agrees to indemnify and save Indemnitee and any and all direct and indirect officers, directors, shareholders, members, trustees, partners, affiliates, employees, participants or agents of Indemnitor harmless from and against all loss, cost, liability and expense, including, but not limited to, reasonable counsel fees and disbursements to the extent relating to (i) Indemnitor’s gross negligence or willful misconduct and (ii) any action by Indemnitor in breach of this Agreement.  Indemnitee agrees that Indemnitor shall have the exclusive right, at its option, to conduct the defense to any claim, demand or suit covered by Indemnitor’s indemnification of Indemnitee with counsel selected by Indemnitor, provided however that Indemnitor shall:  (a) notify Indemnitee and any insurance carrier (as required) reasonably promptly after Indemnitor receives notice of any such loss, damage or injury; and (b) take no action (such as admission of liability) that bars Indemnitee from obtaining any protection afforded by any insurance policy Indemnitee may hold or that might prejudice Indemnitee in its defense of a claim based on such loss, damage or injury.  Notwithstanding the foregoing, Indemnitor’s obligations hereunder shall specifically exclude any consequential damages and/or any loss, costs, liability and expense, to the extent arising in connection with any negligent or intentional act or omission of Indemnitor.”

Insurance• Ideally, indemnification performed by insurance provider• Run minimum coverages by insurance provider / risk manager• Requiring insurance certificates / additional insureds is common• If Self-Insured, require min. net worth

Default• Ask for notice and cure rights• Monetary defaults get shorter cure periods then non-monetary• If no cure periods, add grace periods• Limit monetary damages (not covered by indemnity) to cancellation

fees

Other Events at Venue• Venues reserve the right to host other events• Such other events can’t materially interfere with your event• Ask for exclusive; if they push back narrow exclusive to competing

uses; if they still push back, ask for notice and/or consultation

Non-Compete Clauses“The facility agrees not to host any meetings or events within the same Group’s occupation or profession on the premises while the Group is present during the Group’s scheduled dates. In addition, the facility will inform consult with the Group of any such conflicts of interest within a reasonable amount of time regarding any potential conflicts of interest. This includes, but is not limited to, any signs, advertisements, or promotions for competing enterprises visible at the facility. If the Group agrees that such a conflict of interest does exist, the facility agrees not to contract with that company.”

Construction Clauses• Do your due diligence to ensure that there is no construction at the

venue that might interfere with your event • Add provision that obligates venue to prevent construction from

materially interfering with event• Ask for options to relocate, terminate or for a just and equitable

reduction in fees if there is construction• “In no event shall any construction at the facility materially interfere

with the planner’s event at the facility.”• If they say no, require them to use a certain level of “effort” to

minimize disruption.• Difference between best, CRE and diligent efforts….

Other Contract Issues• Special Concessions:

– Ask for anything reasonable. i.e. Comp rooms, volume discounts, staff rate, extended rates (pre/post), upgrades, resort fees, parking, Wi-Fi, amenities, airport transfers, site visits, meeting room rental, bottled water, filtered/Infused water, storage…the list goes on!!!

• Cut-Off Dates. This is the date by which hotels release rooms for general sale• Disputes: Arbitration v. court• Notice provisions: Negotiate overnight delivery and fax and email notices (with

notice by other method).• Waiver: A party’s decision not to follow contract once, doesn’t change written contract

(or does it?)• Governing Law / Venue. Make the venue and governing law where your company is

located “home court advantage”• Counterparts. Without counterpart clause, parties must sign same instrument. Scans

as good as originals?

Call A Lawyer?• If the above seems confusing, that’s only because it is. • Know when to pick up the phone and call a lawyer!