Advancing the meetings, conventions and expositions industry Attorneys and Counselors at Law

1620 I (Eye) Street, NW 6th Floor Washington, DC 20006 1001 Pennsylvania Avenue, NW, Washington, DC 20004202.429.8634 Fax: 202.463.8498 703/610-9030 202 624-2500 Fax 202 628-5116

CHAPTER 7: CONTRACTS, LIABILITY AND INSURANCE

By Jeffrey W. King, Esq.Crowell & Moring

CIC General Counsel

_________________*Copyright by J.W. King, 2007

-1-

CHAPTER 7: CONTRACTS, LIABILITY AND INSURANCE

For better or worse, legal complexities affect even the most routine event-planning activities. An essential part of a planner’s job is to be familiar with certain legal concepts regarding contract law. Events such as meetings, conventions andexhibitions require many types of contracts. These may include exhibit hall licenses and leases, hotel contracts, insurance policies, meeting management contracts, exhibitor contracts, supplier contracts, speaker agreements and employment agreements, to name a few. These agreements define the rights and obligations of the parties involved, the space or services provided, the time and type of performance expected, the terms of payment, and the liabilities and responsibilities of each party in the event of a dispute.

This chapter presents general guidelines for handling event contracts and insurance. Each organization has its own requirements, and planners should always seek legal advice before signing any agreement that could result in a liability against them and their organizations. Understanding the legal issues and contract terminology, as well as the types of insurance coverage available to protect their organizations, will enable planners to exercise sound judgment before signing legally binding documents.

(Note: An excellent source for basic contract terms, along with definitions and explanation of those terms, can be found in the “Contracts Accepted Practices” Report by the Convention Industry Council’s APEX Contract Panel.)

CHAPTER CONTENTS:• Contracts — Overview• Contract Terms and Conditions• Breach of Contract• Insurance Coverage

Contracts — Overview

A contract is an agreement between two or more parties that creates obligations for the parties. For example, a catering contract obligates one party to provide food-and-beverage services and another party to pay for those services. A contract does not have to be a formal written document. In some circumstances, an oral agreement can exist that obligates the parties equally as a written contract. Note, though, that the parties to an oral contract often have different recollections, leading to disputes. A binding contract also can be created, in certain circumstances, by merely countersigning a proposal. However, letter agreements

-2-

that do not articulate all the terms agreed to by the parties can result in future problems.

It is recommended that all contracts be in writing. A written contract enables the parties to confirm the numerous details of the relationship that go beyond rates and dates. Aim to reach agreement on as many items as possible during the initial contract negotiations. Well-drafted and complete contracts avoid later uncertainty and acrimony. Failure to focus on the unique aspects of an event may result in problems, even litigation, if the relationship between the parties sours and a dispute arises. Careful attention to hammering out specific details in a written agreement will protect the interests of the planner’s organization. As a result, there are two important questions to ask before signing a contract: (1) Are the terms of the contract set out with specificity (e.g., rental rates, services provided, duration, etc.)? (2) Does the contract encompass all items of agreement between the parties?

Because contracts for events are often signed years in advance, it is essential that the parties communicate regularly once the contract is signed. That will alert them to any potential problems such as a change in the scope of the event, changes in the facilities, and other common issues that arise. It is often advisable to verify these communications, and any agreements that are reached, in writing.

Similarly, all information and correspondence relating to contract negotiations, execution and subsequent communications should be retained at least until the satisfactory conclusion of the contract. Upon completion of the event, the information should be discarded only in accordance with appropriate government regulations and the parties’ document-retention policies.

The information provided in this chapter addresses contracts for events in the United States. Other countries may have different requirements and legal precedents. The Convention Industry Council International Manual provides an excellent review of the unique requirements for international events.

Contract basics

To create a valid contract, there must be three basic elements:

1. An offer — It must contain the basic terms of the agreement.

2. An acceptance — The offer must be accepted without change or it becomes a counteroffer, which in turn must be accepted as submitted to create a valid contract.

3. Consideration — The agreement must define benefits to each party (e.g., the facility provides meeting rooms and the event sponsor pays for the space).

-3-

To be binding, the contract also must be signed by an individual of legal age who is the actual party to the contract or who has authority (actual or apparent) to bind the party for whom he has signed the agreement. This person is called an authorized signatory.

An offer must contain the basic terms of the agreement but does not have to contain all of the details. As a result, it is important that if a request for information or a proposal is not meant to be an offer, it should specifically state that. Courts often have found that such documents are offers, meaning the other party can simply accept the offer and thereby bind all parties to a contract.

An offer can be accepted by the other party at any time until it is terminated or withdrawn. It is therefore essential that when an offer has been made, there be a specific date when acceptance must be received by the party who made the offer or the offer expires. Failure to do so could result in one party thinking the other party is not accepting its proposal as a result of a lapse of time and enter into another agreement, only to find that it now has a binding obligation with two facilities or for two events for the same dates. Unless one party has paid the other party to have an offer left open for a set period of time, an offer can be withdrawn at any time, even if it has a set time period for acceptance.

Finally, understand that a contract essentially allocates risk among parties. Each party strives to protect its own interests in the negotiation process. It must be remembered, however, that the contract is an attempt to create a business relationship in which each party needs the other party to cooperate. As a result, the contract should be negotiated fairly and in good faith.

Contract Terms and Conditions

Contracts contain terms and conditions that are intended to protect the interests of both parties. You should be familiar with the various types of provisions that are often included to ensure that the contract covers all the bases.

The Convention Industry Council’s APEX Contract Panel has prepared a report on “Contracts Accepted Practices.” That report provides definitions and an excellent discussion of the various terms regarding contracts.

Preamble/option status

A preamble is an introductory statement at the beginning of the document that identifies the parties by names and addresses. The preamble often affirmatively

-4-

states the intent of the parties to enter into a contract. This section often includes basic background or recital information such as the “Whereas” clauses.

If the contract is also the offer, the preamble often will contain an option clause that allows the receiving party a set period of time in which to accept the offer. It is common for the party providing the offer, such as an event facility, to send a contract with an option for the event organizer to sign and return the contract by a certain date or space will be released. A date set forth to accept the offer in the preamble simply means that the offer is automatically terminated on that date if the facility has not received the signed contract.

Event details

The chances for misunderstandings will be reduced if the contract identifies basic facts about the event. It should identify the name of the event, the type of event, the move-in/move-out dates, and any early-arrival or late-departure requirements.

The contract also can set forth the allocation of obligations under the Americans with Disabilities Act (ADA). The ADA applies only to events conducted within the United States, but for events in other countries, similar laws or regulations may be in place of which the planner should be aware. The facility generally is responsible for public areas, sleeping rooms, restrooms, etc., and the event sponsor generally is responsible for function room layouts and accommodating special needs (e.g., sign language interpreter, large print).

Sleeping rooms

A hotel contract needs to specify the numbers and types of guestrooms being reserved. This provision also should include:

• Details on room reservation and confirmation, such as whether reservations will be made by rooming lists or by individual attendees calling in

• Any complimentary room policy• Special room requirements and rates for VIPs, staff and suppliers• The cut-off dates for reservations• Guarantee and deposit requirements• The check-in and checkout times• Specific room rates (or formula by which rates will be computed) for the group• Room taxes• Early-departure fees and all other charges

This provision also should address what happens to rooms not reserved within a block after the reservation cut-off date — released back to the hotel for sale to

-5-

other guests; continue to be made available to the group at the agreed-upon rate(provided rooms are available); or charged to the group’s account. It is also important to identify what rooms are included in determining whether a block was filled, including reservations made outside of the normal reservation procedures established under the contract and whether reservations for rooms used before or after the event will be counted in the total cumulative room block.

Another provision that can be helpful to include is to specify what takes place if a guest is relocated, often referred to as walking the guest, as a result of overbooking the facility. In the event the hotel cannot accommodate an attendee with a confirmed reservation, the contract should provide information on what alternative accommodations will be provided, the provision for ground transportation, relocation back to the hotel as soon as a room is available, and possible other concessions.

Function space

1. Basic Terms. The contract should specify the function space requirements, any room-rental or set-up charges, convention services and equipment provided by the facility, and the jurisdiction and responsibilities of any unions under contract with the facility. The contract also needs to identify set-up times and, if possible, the specific rooms to be utilized during the event. If the event includes exhibits, the contract should also specify the requirements for exhibit booth storage, set-up and dismantling, security, hours of operation, services, and key rules and regulations.

Because multiple or competitive events can have a potentially negative impact on an event, the contract may have a clause requiring the facility to disclose other events scheduled during the same or overlapping dates, including those booked after the contract is signed. If exclusive use is required, with no competition to your program, be sure to set forth this requirement in the contract.

2. Condition of Facility. Another clause to consider protects the group from material deteriorations of the premises between the time when the event is booked and when it is held. Often contracts give the group the right to cancel the event without paying damages in the event of a material deterioration. The clause also should address the facility’s obligations if it is undergoing renovation or construction during the event.

Food-and-beverage functions

Every contract needs to specify:

• The projected number and type of food-and-beverage functions

-6-

• The dates by which the group must confirm function space to be used and the approximate attendance expected at functions

• The dates for confirmation of menus and beverage service• The dates on which the facility and the organization must agree on food-and-

beverage costs• The details on gratuities, regulations and taxes

In some cases, contracts specify that food-and-beverage attrition will be based on meeting a minimum dollar amount rather that an expected number of guests at a particular function. In contracts where a food-and-beverage attrition clause is present, the contract needs to specify the consequences if the event falls below the number of projected attendees or minimum dollar amount. The clause also should specify the amount or method of calculating the damages that will be paid if the expected minimums are not met as well as whether the calculation includes or excludes tax and gratuity and/or service charge.

Outside vendors

It can be helpful to clearly specify in the contract a facility’s exclusive services policies. After the contract is signed, if there are changes to exclusive services, the facility should provide the customer with reasonable notice of the new exclusive service and an opportunity to accept or reject it. The contract should specify whether outside vendors are allowed and the conditions under which they may work at the facility.

Concessions

There are two definitions of concession that parties to a contract should be aware of. The first is merchandise or refreshments sold on site to individuals in conjunction with an event. When discussing this type of concession in contracts, the right to provide merchandise and refreshments sold on site should be specified, and any income sharing should be set forth.

The second type of concession is a contractual agreement where one party provides something of value to the other party in exchange for something else, pending certain conditions. Concessions may be offered by a hotel or other service provider to a group as an incentive for good performance or as an incentive for a group to choose that hotel or other provider. Not all concessions will be appropriate to all events. The amount or type of concessions may be determined by a group’s performance (e.g., achieving a certain percentage pick-up of the room or package block) or may be straight concessions that the group gets regardless of performance. If concessions are tied to performance, the contract may specify how and which concessions will be negated or recomputed based on certain levels or percentages of pick-up. All concessions agreed to should be specified in the contract.

-7-

Billing arrangements

It is good practice for billing and payment terms to be specified in the contract. These terms can include the method of payment, time of payment, any deposit requirements, format of bills, review opportunities, procedures for handling and resolving disputed charges, the names of authorized signatories to the master account, and any discounts for early payment of the master account.

The contract also should specify the extent of the rights of the event sponsor to review the billing. The purpose of the review is both to ensure that all of these expenses are correct and to gather data regarding the event. For example, a group may be interested in knowing the food-and-beverage headcounts at each event or the pattern of hotel room pick-ups so that those data can be used in planning future events. One approach to ensure this information is provided is to specify in the contract that no final payment is due on the master account until all the information regarding the event is provided.

Termination

Termination clauses are provisions that excuse non-performance of the contract without liability. For example, force majeure or Act of God clauses protect the parties in the event that a contract cannot be performed due to causes that are outside the control of the parties and cannot be avoided. The contract should specify who can terminate the contract, under what circumstances the contract can be terminated without liability, the requirements for notice of termination, and any costs involved for termination.

Cancellation and attrition

Cancellation and attrition are different concepts. Cancellation is when one party cancels a contract and does not perform any of its obligations. Attrition, on the other hand, is where the contract is performed but one party does not fulfill all of its obligations. This generally involves a failure to fill a room block as specified in the contract or food-and-beverage volume falling below what is specified in the contract.

Cancellation: Generally, a cancellation clause outlines the damages to be paid to the non-cancelling party if a cancellation occurs. This can include a liquidated damage clause that stipulates the amount of damages in the event of cancellation. However, the absence of a liquidated damage provision does not mean that either party can cancel without liability

.

-8-

Cancellation by the event sponsor often is covered in contracts. Many contracts, however, fail to address the what happens if the event facility cancels or otherwise breaches its obligations. The event sponsor can negotiate to include a liquidated damage clause for such cancellation. In calculating the amount of liquidated damages, the cost of relocating the event should be taken into consideration. However, even if there is no liquidated damage clause, the event sponsor is entitled to damages if the facility breaches the contract. The damages are likely to include the cost of relocation and any impact on attendance. Note that a lawsuit to collect these damages likely cannot be brought until after the event in order to ascertain the actual amount of damages incurred.

Attrition: Many contracts have attrition clauses. The attrition clause identifies the obligation of the event sponsor to meet minimum attendance or revenue commitments for sleeping rooms and food-and-beverage functions. However, an attrition clause is not required in order to have a binding contract. If there is no attrition clause, it does not mean that in the event of attrition there will be no damages, but rather that damages will be determined by a court. Planners should be aware that in such cases the group may become obligated to pay for the entire unused portion of its room block. That is why it is important for the group to make sure all hotel contracts have attrition clauses, which typically allow some percentage of slippage (often 10% or 20%) from the contracted guestroom or food-and-beverage commitment.

Indemnification

Arguably, the most controversial and least understood area in facility contracts is indemnification clauses and the corresponding liability insurance requirement.

Many contracts specify who is liable for any injuries that may occur under the contract and state any limit on the amount of liability. Under an indemnification clause, one party agrees to protect another party from liability as a result of a lawsuit by a third party. The clause usually is written so that a party whose negligence causes a liability provides such protection to the other party. It is essential that if the event sponsor is indemnifying the facility, the facility also indemnifies the sponsor. The two indemnification clauses should be essentially identical to ensure that each is getting the same protection.

Because some states provide for indemnification as a matter of law, some contracts do not contain indemnification clauses. Moreover, some government-related entities, such as convention centers, are unable to agree to indemnify due to state laws. In those circumstances, insurance is the key to obtaining appropriate protection. In reviewing indemnification clauses, it is important to identify what type of liability is being covered. Some indemnification clauses cover only gross

-9-

negligence and willful acts; the vast majority of liability, however, results from simple negligence that is not covered by such clauses.

The indemnification clause can do more than just indemnify the non-negligent party. If covering litigation costs and damages is a concern, the clause should provide that the liable party agrees to “hold harmless, indemnify and defend” the other party.

Insurance

The contract should address whether both parties have appropriate insurance policies. These may include, but are not limited to, commercial general liability (CGL), worker’s compensation, event cancellation, business interruption, and liquor liability insurance policies. Consideration should be given to whether the contract should specify the minimum amount of insurance to be secured and whether each party will name the other party as an additional insured on existing policies. The contract also should determine whether certificates of insurance should be exchanged to verify that the party has in fact obtained the required insurance to protect the other party. Given the complexities of insurance, the party should consult with its legal counsel or insurance broker regarding insurance policies to ensure it has appropriate full coverage.

Dispute resolution and governing law

When disputes arise regarding a contract, the first step is to look at the contract language itself. Not only will the contract terms determine the rights and remedies of the parties, the contract also may provide where and how the dispute is to be resolved. Unless specified in the contract, the prevailing party will not be able to recover attorney fees incurred to enforce its rights under the contract. Generally, if parties cannot resolve a dispute, a party must file a claim in a state or federal court to enforce its rights.

Contract breaches and litigation can be prevented by providing both parties reasonable time to resolve defaults. They can mutually agree to provide reasonable notice of contract defaults and reasonable time to cure or remedy the defaults, except for defaults that carry a risk of personal injury or damage to facilities.

A contract can specify that the parties will use an alternative dispute resolution (ADR) procedure instead of going through the process of filing a complaint and pursuing the claim in court. It is essential that the contract state clearly how and where disputes are to be resolved.

There are several types of ADR procedures available, including arbitration, mediation and private use of retired judges. These methods expeditiously provide both binding and non-binding resolutions of issues. The American Bar Association’s

-10-

Alternative Dispute Resolution Section maintains a listing of available programs on its website. The ADR Section also publishes titles such as “Resolving Disputes in the Global Marketplace,” “State and Local Bar ADR Survey,” “ADR Primer,” “Arbitration Seminar,” “Mediation Seminar,” “Making Mediation Work for You,” and “Mediation: Practical and Ethical Challenges.” These publications are available from the American Bar Association for a nominal fee.

Where proceedings can be pursued will be determined by the courts unless the parties have agreed on that point. It is, therefore, not enough to simply identify an alternative dispute resolution mechanism. It is equally important to consider where a dispute will be resolved, designating not only the state, but also the county or city.

A contract also should specify what state laws will apply in interpreting the contract. If the parties fail to identify the applicable state law and the location for resolving disputes, then the courts will determine these issues through a complex set of rules. Therefore, it is generally in the best interest of both parties to negotiate an agreement that includes such provisions.

Finally, the contract should clearly state that neither party has sole power as interpreter of the lease terms. It also should state that both parties had an opportunity to participate in the preparation of the agreement and to review the agreement.

Miscellaneous

The miscellaneous provisions identify any specific and unique aspects of a contract, such as special parking, transportation or promotional needs.

If a contract is being handled by a planner working on commission, the contract should address the terms and conditions for payment of commissions, rebates or assessments thereto. The contract also should require that the existence of such commissions, rebates or assessments be disclosed to event attendees.

In addition, the contract should address whether a destination marketing organization (DMO), a convention and visitors bureau (CVB) or a third-party event organizer will be involved in the event. The contract needs to address and clearly state any relationship between such parties and the facility.

An event often can bring into play various state privacy laws and regulations. The contract needs to address these issues by ensuring data on attendees are kept confidential and that the facility will comply with all applicable privacy obligations.

-11-

Notices

It is good practice to specifically state how notice is to be delivered and to whom notice is to be delivered.

Assignments

A contract should address whether someone other than the parties to the contract can assume the responsibilities under the contract. This can take the form of a clause stipulating whether a party may or may not assign its rights and responsibilities to a third party and whether consent must be required. This is particularly important in situations where a hotel or other event facility, or the event itself, is sold to a new owner.

Attachments

Contracts often include attachments such as a diagram of the facilities and other related documents. It is important that these attachments be identified as incorporated into and made part of the contract. The contract also should address whether the facility retains the right to make changes in operating rules and regulations for the safe and orderly operation of the facility. This right does not apply to changes that cause a material negative impact on the event.

Authority of signatures

The contract should specifically state that the person signing the contract is of legal age, with appropriate mental capacity to sign a contract, and has the authority to sign the contract on behalf of the party and to bind the party to the contract.

Signatures

There should be a signature block that sets forth the date the contract was signed. For example, the signature block can read, “by James Smith, authorized and on behalf of ABC Association.” A contract also can be “signed by a counterpart.” That means that all parties to the contract sign their own separate signature pages, which are then sent to and assembled by one of the parties. This avoids having to send a contract around to each party when there are more than two parties to the contract. Any pen-and-ink changes should be initialed separately by both parties, and when all documents have been approved, each party should receive a copy of the contract as signed by both parties.

-12-

Default and breach of contract

If either party fails to carry out its obligations in part or in full, the contract is breached. Both the event sponsor and the facility should be entitled to reimbursement of all reasonable, substantiated expenses and lost profits.

A party seeking actual damages for a breach of contract must use reasonable efforts to alleviate the effect of the injury or the breach. Mitigation requires that one party injured by another party take reasonable steps to reduce the damage, injury or cost resulting from the breach. This may include finding alternative vending spaces for groups and similar steps. Unless specified in the contract, mitigation generally does not apply to a contract that includes a liquidated damage clause.

Insurance Coverage

There are many types of insurance available for events. Event planners should discuss their specific needs with an attorney or a qualified and experienced industry insurance agent. This overview will familiarize the planner with the insurance industry terms for various types of liability and exposure, and the coverage that is available to limit liability and protect against losses.

General liability

General liability insurance is a must. It provides protection against claims involving bodily injury and property damage. Consider a high limit — not less than $5 million (it does not cost much more than $1 million in coverage, and it is worth it).

General liability insurance may not provide protection for all obligations. For example, property in your care, custody or control is usually excluded under general liability coverage.

Umbrella policies

An umbrella policy is essentially insurance to cover gaps in coverage under the primary insurance policies. These gaps could be in the amount of coverage. For example, if a general liability insurance provides protection up to $5 million, the umbrella policy would cover claims over that amount. Since the coverage would not start until the insured incurred costs and liability of more than $5 million, the policy is often relatively inexpensive. An umbrella policy also can cover claims that may not be covered by the insured’s primary policies. For example, if an insured’s automobile insurance does not cover rental cars, the umbrella insurance may kick in and cover accidents in rented vehicles. Again, because most claims will be

-13-

covered by the primary insurance policies, umbrella coverage is relatively inexpensive but can provide much-needed extra protection.

Fire liability

Under the terms of a facility contract, the event sponsor may be held responsible for fire damage to the building caused by its negligence. “Fire legal liability” insurance provides protection. Be certain the contract releases the event sponsor from other damage to the building, including damage caused by an exhibitor. Ask the facility to add your organization’s name to the building’s fire insurance or its “all risk” policy. If that is not an option, the event sponsor’s own insurance company can provide “broad form property damage” protection.

To further limit fire liability:

• Ask the other party to waive, in writing, subrogation against the event sponsor and all exhibitors for any damage to the facility caused by fire. This is called a waiver of subrogation.

• Have the other party contractually hold the event sponsor harmless for any bodily injury or property damage not caused by its negligence.

• Have all exhibitors provide complete certificates of insurance prior to the start of a show.

Medical liability

“Medical payment insurance” provides reimbursement of medical expenses for injuries that occur at the site (excluding those suffered by employees and sometimes volunteers) regardless of your legal liability. If you maintain a first-aid station, “incidental medical malpractice” insurance protects you and the nurses or paramedics staffing the stations against claims for failure to render proper or adequate medical assistance.

Independent contractor liability

Require all contractors to provide a certificate of insurance showing that they carry worker’s compensation and general liability insurance (with a liability limit of at least $1 million). Add “independent contractors liability insurance” to protect you against any suit brought against you or the event sponsor as a result of negligence on the part of an independent contractor.

Host and liquor liability

If you operate a food concession or serve food and drink at a reception or dinner, “products liability” insurance can protect your group against claims such as food

-14-

poisoning. “Host liability” or “liquor liability” (depending on state law) insurance protects the event sponsor against claims resulting from serving alcoholic beverages. For example, if a guest becomes intoxicated and has an auto accident on the way home, the event sponsor could be sued for serving the alcohol. Such insurance may be required in certain states if liquor is served at an event.

Additional insured

If a group rents or charters buses, automobiles, watercraft or aircraft, there is a substantial liability exposure for injury to persons and damage to property. During contract negotiations for such vehicles, ask to have your organization named as an “additional insured” on the lessor’s insurance policy for liability, property damage and medical payments; and have the contract stipulate that the organization shall not be held liable for damage to the vehicle itself. If the lessor’s insurance company will not include the organization as an additional insured, obtain that insurance yourself.

Make sure your organization is named as a co-insured on any vendor’s policy, above and beyond any coverage it may have. Also, require the insurance company to give notice of any non-renewal or cancellation of the policy or rider.

Valuable papers and records

Event materials may be stored at a printer’s place of business or warehouse, which may be insured in case of damage before the materials are mailed. However, “valuable papers and records” insurance is available to pay for the cost of reproducing any papers, pamphlets or records (or any part thereof) as a result of damage by fire, water, vandalism, etc.

On-site office

The computers, laptops, desks and other equipment a group owns or rents for use at the event facility can be insured against loss or damage by fire, theft, explosion, water damage, vandalism and malicious mischief. Ask for “office contents coverage.”

During the course of an event, a group may collect checks. Daily deposits are recommended, but “burglary and robbery” insurance is available to cover cash and checks as an additional precaution. Employees and volunteer workers can be bonded.

-15-

Exhibits

Exhibitors can insure their exhibit property through a special program, which may be offered on a voluntary basis, for coverage at the exhibition site as well as in transit to and from. If the exhibitor’s own general liability insurance does not extend to the exhibition site, liability insurance can be made available, as well as insurance to cover a potential loss in the event that booth property does not arrive.

Worker’s compensation

The event sponsor’s worker’s compensation policy probably covers employees who work at the event. If temporary on-site staff are put on the payroll, keep a record of their salaries and the jobs they perform. The insurance company will ask for this information during the audit at the end of the policy term. Also available is “accidental death and dismemberment” insurance, as well as “accidental medical payment” insurance for volunteers.

Travel and accidents

Delegates and guests should be made aware that the organization sponsoring the event is not responsible for their personal property. You can, however, offer for purchase “travel accidental death and dismemberment” insurance for the term of the event, including travel to and from it.

Non-appearance

Events can be insured against non-appearance by entertainers. Contracts with celebrities may contain a clause that he or she does not have to appear in the event of sickness, other types of events or business demands. Insurance may cover any losses incurred as a result.

Event cancellation

Cancellation insurance protects a group against loss of revenue if the event is interrupted or cannot be held due to fire, weather, a strike, or other insured hazard. The insurance also can pay for the extra expenses incurred because of adverse circumstances. For example, a taxi strike may require a group to hire buses to pick up people at airports. Insurance is available that would reimburse for this added expense.

A final note for this chapter: Be sure that all matters are in compliance with local and state laws where the event is conducted.

-16-

CMP EXAM STUDY POINTS

TerminologyacceptanceAct of Godalternative dispute resolution (ADR) Americans with Disabilities Act (ADA)arbitrationattrition clauseauthorized signatorycancellation clausecertificate of insuranceclauseconcessionconsiderationcontractcut-off dateexclusiveforce majeure general liability insurancegood faithhold harmlessindemnification clausejurisdictionliabilityliquidated damage clausemediationnon-performanceofferprovisionunion waiver of subrogationwalk

CMP Exam BlueprintDomain: Financial and Contract ManagementTasks: Negotiating contracts, Securing appropriate types and amounts of

insurance

Related TopicsChapter 14: Facility Selection

-17-

Chapter 17: Support ServicesChapter 19: EthicsChapter 27: AccessibilityChapter 28: Risk ManagementChapter 30: Food and Beverage Issues Forum, “Liquor and Liability”Chapter 32: Special Programs Issues Forum, “Music Licensing”

INDUSTRY RESOURCES

Publications• “Certificates of Insurance,” IAEE Fact File, International Association for

Exhibitions and Events (www.iaee.com)• “Checklist for Hall Contracts,” International Association for Exhibitions and

Events (www.iaee.com)• “Insurance: What you can and should protect,” IAEE Fact File, International

Association for Exhibitions and Events (www.iaee.com)• “Resolving Disputes in the Global Marketplace,” “State and Local Bar ADR

Survey,” “ADR Primer,” “Arbitration Seminar,” “Mediation Seminar,” “Making Mediation Work for You,” and “Mediation: Practical and Ethical Challenges,” American Bar Association (www.abanet.org)

Websites• Convention Industry Council APEX Contracts Panel Report

(www.conventionindustry.org/apex/accepted.htm)• American Bar Association Alternative Dispute Resolution Section

(www.abanet.org/dispute/drlinks.html) — Listing of ADR programs and links to ADR resources

CONTRIBUTORS

Chapter ContentJeffrey W. King, Esq.PartnerCrowell & Moring LLPWashington, D.C.CIC General Counsel

Chapter ReviewJames M. Goldberg, Esq.PartnerGoldberg & Associates, PLLCWashington, D.C.

-18-

CHECKLIST: CONTRACTS, LIABILITY AND INSURANCE

Contracts

Obtain legal advice before signing any agreement

There is no “industry standard” format or content for contracts; what follows is a sample and is not necessarily applicable to or appropriate for all events.

AGREEMENT___ Date:___ 1st Party (Meeting Organizer) Contact Person:___ Billing Address:___ 2nd Party (Facility) Contact Person:

Clauses___ Preamble/Option Status___ Event Details___ Sleeping Rooms or Packages___ Function Space___ Food & Beverage___ Outside Vendors___ Concessions___ Billing Arrangements___ Termination/Excuse of Performance/ Force Majeure___ Cancellation and Attrition___ Indemnification (Hold Harmless)___ Insurance___ Dispute Resolution and Governing Law___ Miscellaneous___ Notices___ Assignment___ Attachments___ Authority of Signers___ Signatures

Insurance Coverage

___ General liability (bodily injury and property damage)___ Fire legal liability___ Broad form property damage___ Medical payment___ Incidental medical malpractice

-19-

___ Certificate of insurance from contractors___ Independent contractors’ liability___ Products liability___ Host liability/liquor liability___ Additional insured for charter transportation___ Valuable records and papers insurance___ Office contents coverage___ Burglary and robbery___ Worker’s compensation___ Travel accidental death and dismemberment___ Event cancellation

REVIEW QUESTIONS

1. What two important questions should you ask before signing a contract?2. What are the three basic elements of a valid contract?3. Why is it important that a proposed contract include a specific date by which

the offer must be accepted by the other party or expire?4. What should be included in a hotel contract clause addressing guestrooms?5. What are the two definitions of the word "concession" that may be addressed

in an event contract?6. What are the differences between cancellation and attrition?7. What does an indemnification clause typically provide?8. What is a party who is seeking actual damages for a breach of contract

required to do?9. If you have a general liability insurance policy, why should you also consider

getting an umbrella policy?10. What steps can be taken to limit liability for fire damage?

An offer can be accepted by the other party at any time until it is terminated or withdrawn.

A contract is an attempt to create a business relationship in which each party needs the other party to cooperate.

Many contracts fail to address the event what happens if the event facility cancels or otherwise breaches its obligations.

Arguably, the most controversial and least understood area in facility contracts is indemnification clauses.

Unless specified in the contract, the prevailing party in a dispute will not be able to recover attorney fees.

-20-

Mitigation generally does not apply to a contract that includes a liquidated damage clause.

If a guest becomes intoxicated and has an auto accident on the way home, the event sponsor could be sued.