change take
There was a time when contracts were signed haphazardly and deals were sealed with a handshake. Those days are over. Today, the industry relies heavily on detailed written terms.
Andrea Doyle
The event went off without a hitch, and you’ve paid thousands of dollars to the caterer and other vendors. But the final installment never came. It happens, that’s when you need a solid contract.
“We always say the events industry is a relationship industry, but you also have to protect yourself and do that through contracts,” said Jill Blood, vice president, associate general counsel and privacy officer at Maritz. “We protect the worst-case scenario. Sign the contract.”
According to Blood, 80 percent of the contract details can be the same for each event. However, there need to be specific details on deposit and payment terms as well as deliverables. “Before you start working, give a true description of what you are going to do and put it into place. I know this is easier said than done as many meetings are planned on tight schedules. But I always say that when everything is going well , you don’t have a contract when things don’t go exactly as planned,” Brad said. “If you have a dispute about your performance and whether you performed well, the details in the contract will benefit both parties,” she added.
Keep contracts up to date
Contracts must evolve based on current circumstances. For example, staffing remains an issue. Therefore, staffing issues should be addressed if the contract is aligned with the success and execution of the event. Contracts may also include specific service or service level expectations. Minimum staffing levels can be promised in the contract, especially if this is a high-profile event that requires sign-ins. Some contracts even include specific standards for housekeeping services.
Force majeure and coronavirus-related clauses have been among the most important and frequently negotiated clauses in tournament contracts for many years. “Recently, we’ve seen an increasing focus on provisions involving issues such as DE&I, sustainability and artificial intelligence,” Blood said. “This ongoing evolution can be a challenge for those planning activities in the future, so building some flexibility into long-term contracts may be helpful.”
A U.S. Court of Appeals recently ruled on force majeure contract clauses, allowing termination based on anticipated failure to perform. The clause now applies when the contract ends rather than when the activity begins.
This could have a significant impact on events. For example, if a meeting is scheduled in the tropics and the weather forecast a week out shows that a hurricane will hit during the event date, the group can request a force majeure cancellation even if the hurricane changes course and the following conditions exist: The sky is blue on the day of the event.
Negotiate to achieve a win-win situation
Gary Murakami, vice president of global sales and industry relations for Teneo Hospitality Group, has negotiated thousands of contracts during his career. “It all comes down to how you start the conversation; you need to understand the needs of the business and the client in order to negotiate effectively to help reduce risks, avoid pitfalls and deliver the best outcome for both parties.
He shares three things to remember when negotiating a contract.
- relation – “This is our business, we are not rivals. We want to create and execute an unforgettable program based on your specifications so that you come back,” says Murakami.
- fact – Understanding what is most important, what is flexible, and what is non-negotiable is key.
- flexibility – Murakami emphasizes the importance of good communication between both parties to achieve a flexible approach.
