If you thought event contracts were tricky before the pandemic, buckle up for even more complications.
Force majeure Flexibility
In 2020, executing the force majeure clause in a contract was fairly straightforward. The government had declared a lockdown due to the Covid pandemic, so there was no question that the following elements of force majeure existed:
It wasn’t possible to hold in-person meetings or events as it was illegal due to the lockdown. The fundamental purpose of meetings had been frustrated.
Performing the activities stipulated in the contract had been made impracticable. This means the performance of the contract was materially more burdensome than had been expected initially due to an extreme or unforeseeable event.
In 2022, the circumstances creating force majeure are no longer so obvious. Instead, the situation is much more nuanced. As a result, foster advises his clients to be cautious and not assume everything is a hundred percent back to normal — especially when drafting the performance clause in contracts.
“It’s important to list exactly what you want covered by the phrase ‘unforeseeable event.’ You have to define what that means,” said Attorney John Foster, Esq., CHME who represents meeting and event planners in contract issues. “The operative phrase should be ‘if any of this list of things occur, it will negatively affect the ability of the party so affected to perform on the contract, and they will be allowed to terminate their obligations.’ A lot of contracts don’t specify that. Planners need to have that operative phrase that says you have the right to terminate the agreement if certain bad things occur.”
Lisa Sommer Devlin, a hospitality lawyer representing hotels, points out that while hoteliers can agree to broader force majeure clauses, they are not obligated to do so, and at its heart, force majeure is a narrow set of circumstances.
“A true force majeure means you cannot perform the contract due to circumstances beyond your control. That’s a very narrow definition,” she said. “Adding things like epidemic and pandemic just leads to disputes. Because from the hotel’s perspective, we’re still in the middle of a pandemic right now, but we’re having meetings every day. In 2020, it wasn’t the pandemic that prevented meetings. It was the government restrictions that prevented meetings.”
Sommer Devlin suggests that planners talk to hoteliers about the issues they are worried about and negotiate a contingency plan for those situations.
“Have a standard force majeure clause and then try to agree on a separate clause about other contingencies that might impact the meeting. These discussions should take place about a year out. Have an agreement to reevaluate the situation at a date closer to the meeting and based on what’s happening then agree on what adjustments should be made.”
Make sure your contract covers performance on-site. The hotel industry is still struggling to restaff after the government lockdown, which has made hotel staffing an issue when it comes to servicing meetings.
Sommer Devlin doesn’t think it is helpful to put clauses in a contract that say the hotel guarantees it will have staffing at the same levels as it had in 2019 because hotels always staff based on occupancy, not on what occurred in previous years. So if a hotel is only at 50% occupancy, it will not be fully staffed. “I suggest having guarantees that the hotel will have sufficient staff based on a ratio, such as you’ll have one waiter for every x-number of attendees at a banquet and one waiter for every x-number of guests at a buffet,” she said.
Sommer Devlin had a situation last fall where a group was very concerned about the hotel’s ability to staff their event because the hotel was still closed due to the pandemic. They knew it would be reopening in time for their event, but they were worried about staffing. So the hotel brought the group’s meeting planner to the hotel for a site visit to meet not only the hotel staff but with union representatives, who explained how quickly they would be able to staff up for their 2,000-attendee event.
“It gave them a great deal of comfort. That’s the thing that I think is important,” said Sommer Devlin. “You don’t necessarily have to put all this in your contracts. Have ongoing communications with your hotel partner to raise concerns and then make your expectations realistic.”
But Foster prefers to have things like that spelled out in a contract. “If a hotel guarantees that they will be able to serve a certain number of people at a sit-down function, then it’s their obligation to have the staff accomplish that. And if they don’t, there needs to be some sort of agreement worked out on how the group will be compensated if they have to change their plans or cancel their food functions,” he said.
Events Pose Risks
Everyone needs to share the health risks of meeting. As groups return to meeting again, there is a sharing of risk for keeping attendees safe. Planners, hoteliers, and even attendees are all responsible for this effort, which is reflected in meetings contracts.
Smart planners are posting release of liability agreements on their event websites for attendees to accept their portion of the risk.
“I’ve written one out that says attending meetings comes with a certain amount of risk, and by registering for the conference, the attendee accepts that risk,” said Foster.
One new clause that Foster is adding to contracts is designed to guarantee the property has adequate meeting space to accommodate groups that align with the social distancing requirements. “If social distancing is required in that state (and that’s changing every day), groups need more meeting space to allow attendees to keep six feet apart,” he said.
Foster also has added a clause that stipulates that hotels will meet or exceed their stated COVID 19 safety protocols. He also states that the hotel will agree to hold the group harmless and indemnify them if an attendee claims they got sick at the hotel.
Sommer Devlin doesn’t think that type of clause is necessary. “I don’t think that any court would ever hold a meeting planner or a hotel responsible for exposing somebody to COVID at this point,” she said. “First, it’s not something that can be controlled, and second, you could never prove how somebody got exposed. Did they get exposed in the cab? Did they get exposed in the airplane? You could never prove where the infection happened. So I don’t think that’s something you need to put into a contract. It’s just the new way life is. Everybody has to assume some risk — even attendees.”