John's Thoughts on Privacy and the Audit Provision


May 19, 2006

From John Foster, Esq., CHME

Since attrition and cancellation damages can potentially add up to a large sum of money, meeting sponsors should include an audit provision in the contract to protect the integrity of the process. The reason for including an audit provision is that the hotel has an affirmative duty to prove that the attrition or cancellation damages billed to the meeting sponsor are actually owed and are accurate. The process of coding reservations to a specific group is neither scientific nor error free. The human element on the part of the hotel and the attendees virtually guarantees that mistakes in group coding will occur. Meeting sponsors should insist on the contractual right to audit the hotel’s in-house guest list with the supervision of a hotel representative.

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John's Thoughts on Attrition and Cancellation


May 19, 2006

From John Foster, Esq., CHME

The wording of attrition and cancellation clauses continues to be a major sticking point in hotel contract negotiations. The purpose of these clauses is to establish the level of performance required from one or both parties and the compensation due the injured if the performance level isn’t met. These terms must be prepared strategically because they represent potentially large sums of money and must be acceptable to both sides. The must also be prepared correctly in order to be legally enforceable.

Contract law provides that if one side breaches a contract, or under-performs, the other side is entitled to damages, but not penalties.  The purpose of this rule is to put the injured party in approximately the same financial position as possible as if the contract had been performed. This is called giving the injured party the “benefit of the bargain”.

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Force Majeure Clauses


May 17, 2006

By John S. Foster, Esq., CHME

Recent events and catastrophes around the world like terrorism attacks, hurricanes and earthquakes, a worldwide SARS epidemic, tsunamis, strikes and labor disputes by hotel workers, and power outages in major cities are a reality that planners and suppliers must consider when planning meetings.

The controversy surrounding force majeure clauses and their wording stems from the different viewpoints that planners and suppliers approach the entire concept of what has to happen before the meeting sponsor is allowed to terminate the contract  without liability.

From the suppliers perspective, the force majeure clause should only refer to acts or occurrences that totally prevent the meeting sponsor from holding the meeting.  From the meeting sponsors perspective, holding the meeting is the second concern, not the first.  The first concern for meeting sponsors is their ability to attract attendees to the meeting when certain acts or occurrences intervene after the contract is signed that materially affects its ability to do so.  With the exception of certain corporate events where employees are commanded to attend, many meetings are planned and specific groups of people are invited to attend with no guarantee that anyone will show up. Additionally, meeting sponsors are required by law not to subject their attendees to unreasonable risks of harm. Holding a meeting in a city that has recently been devastated by a hurricane, or is experiencing a disease epidemic, potentially violates the meeting sponsors legal duty to its potential attendees. Meeting professionals understand that first-rate meeting planning starts with the contract language in client-supplier agreements. Good contract language should address the consequences of a potential catastrophe and its negative influence on event attendance.

Contract law provides that, absent wording in the contract providing otherwise, one or both of the parties can terminate their performance of the contract if that party's performance is made impossible, impracticable, or is frustrated by supervening events making the value of performance worthless to that party. These legal principles apply by default when a supervening act or occurrence affects the meeting and the parties did not allocate the risk and consequences in the contract. If parties do not want the risk of unintended consequences from future acts or occurrences outside their control, the contract should comprehensively address what standards will apply and what the consequences will be.

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Issues Facing the Meeting Industry


May 17, 2006

By John S. Foster, Esq., CHME

I'm pleased to be participating as a "Meeting Industry Guru" this week with my colleague, Lisa Sommer Devlin. As Lisa alluded to, she and I are frequently on opposite sides of the negotiation table between meeting sponsors and hotels and on opposite sides of the lawsuit or arbitration when contract disputes arise.

Lisa and I usually agree, with a few exceptions, on what the law is that controls legal issues in the meetings industry. Where we frequently disagree is how to apply the law to specific fact patterns,  both during negotiations and after the contract is signed, in order to avoid the potential pitfalls and risks affecting both planners and suppliers daily in the meeting industry. Just like the complex issues facing the USA and other countries worldwide, our industry has become more complex with increasing risks.  These complexities must be dealt with fairly and legally in meeting industry contracts by each side or else the parties are setting themselves up  for expensive disputes in the future. The effect is that industry contracts have become longer with new terms being created on a regular basis to deal with new issues.  Even if lengthy negotiations on multiple issues are not your preference, remember "John's Golden Rule of Business Agreements": If you ask for something from the other side before the contract is signed it's called " Negotiating "; If you ask the other side for something after the contract is signed it's called " Begging ". Hence, it's  much better to take the time to negotiate all relevant terms up front rather than begging for terms later that you forgot or were too lazy to negotiate before signing the contract. If contracts are not your strong point, by all means seek legal counsel from an attorney that is familiar with the meetings ndustry.

I may disagree with Lisa on how the law should be applied to certain facts and negotiation points,  but she and I agree on what the frequent issues are that take the most time to negotiate.  Lisa has adequately identified some of these key issues in her post. During the next few days we will be posting our "point/counterpoint" discussion of these issues and others as they arise. Feel free to join in the discussion and express your opinion if you have something to say.

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