An effective contract protects your meeting but creating one is no easy feat. All the possible what-ifs must be considered. "To build the best contract possible, a planner should have an industry expert acting as their advocate with the hotel while negotiating the very best possible business terms, and a lawyer advising on the legal terms," says Brooklyn, NY-based Roxane Kramer, CDS, global account executive at ConferenceDirect, a full-service meetings solutions company. "The old adage of 'hope for the best but plan for the worst' should be kept in mind with every contract." She adds that each clause is a commitment and is included to protect either the hotel or the group or both.
Why Use a Contract?
A contract is an agreement enforceable by law. "Simply put, a contract outlines responsibilities and rights of respective parties, preferably in writing, as memories get short when there is controversy," explains Jonathan T. Howe, Esq., founding partner and president of Howe and Hutton, the Chicago and Washington, D.C. firm that specializes in meetings, travel, and hospitality law. "It is a roadmap to a successful event outlining what will happen and when and who will be responsible when something goes amiss."
John Foster, Esq., Foster, Jensen & Gulley
Contracts have become voluminous and harder to understand as planners have had bad experiences and have added clauses to prevent them from ever happening again. "The purpose of a contract is to clarify the intent of the parties. Putting the terms in writing forces the parties to be clear about what they will do regarding performance expectations and what they expect the other party to do in order to make the arrangements successful," explains John Foster, Esq., CHME, attorney and counselor at law of Atlanta, GA-based Foster, Jensen & Gulley, consultants and counsel to associations, nonprofit organizations, trade-show and event sponsors, and meeting and convention professionals. "Agreements that cannot be performed within one year from the date they are made must be in writing to be enforceable. Also, contracts for the sale of goods, including food and beverage $500 or above, must be in writing to be enforceable. In some states the threshold amount is higher."
A contract should include:
• The parties in the agreement. For example, who is a vendor, who is the client, and what relationship does each have with the other?
• Who is going to do what, to whom, and when?
• What is the desired outcome?
• Set dates and create a timeline. What happens and when?
• Define venues and their responsibilities.
• Define the logistics of how the contract will be carried out.
"It is better to spend time on the front end of the negotiations to insure that the contract is thorough, comprehensive, and inclusive of all necessary terms in order to ensure the intent and the enforceability of the agreement," says Foster.
He recommends that meeting professionals not depend on third parties -- who are not lawyers -- for expert advice on how terms should be written. "Non-lawyers can be relied upon for negotiation advice but should not be relied upon for so-called legal advice about contracts. Many third-party non-lawyers hold themselves out as contract experts when they really mean they are negotiation experts. I've seen too many pitfalls overlooked, causing heartache to meeting sponsors who relied on bad advice," adds Foster.
How To Draft a Contract
"The basic premise of knowing the specific legal needs of an event is more of a focus than ever these days," says Becky Bromberg, vice president and associate general counsel of Maritz Holdings, parent company of Maritz Global Events based in Fenton, MO. "It's important to have content in all necessary provisions that cover the needs of both the event and the suppliers."
TIP #1 Keep it short
Although Bromberg says it is essential to have a contract that specifies what must be delivered and the needs and wants of all parties, it doesn't need to be a huge document.
"Maritz has reduced the length of our contracts and I would like to see them reduced even further," she says. "We have to get somewhere between a contract that is hundreds of pages and a handshake."
Some contracts have links to a company's code of ethics, its security documents, etc., and when all the documents are pulled together, it is massive. "Many can find it difficult to deliver from a business perspective, especially when you have so much extraneous legal content," explains Bromberg.
The essential information that must be included is the who, what, where, when, why, how, and how much.
"It benefits both the client and hotel to really understand the numbers as well as the language in a contract," Bromberg says. "It is also important to state the actual dates of events with month and year, not just 90 days out or 30 days before."
TIP#2 Be ready for tweaks
Most contracts are constantly changing. Dana Toland, founder of the IT Exchange Group (ITEX), a meeting management company based in Weymouth, MA, started writing her own contract on behalf of her clients 15 years ago. ITEX specializes in helping clients identify the best hotel to meet their budget needs, as well as the conference goals and objectives. As a value-add to the site selection process, which is a no-cost service offered to its clients, ITEX will also draft a 20-plus-page hotel contract at no cost. Toland justifies doing so because a properly written contract cannot only realize a company the most favorable terms, but can help to substantially reduce its risk and liability.
It's not just planners who constantly tweak the contract process. Take Convene, a company that runs more than 120 meeting spaces across 10 locations in three cities. "By September, all Convene locations will be using a contract with an e-signature format. As we develop and grow our partnerships with clients, there's no reason to suddenly get into an adversarial relationship at the contract phase. If we follow the spirit of the relationship into the contracting, we can get to a win-win," says Convene's vice president of sales, Steve Sackman.
TIP#3 Be specific
Joan L. Eisenstodt, founder of Washington, D.C.•based meeting consulting firm, Eisenstodt Associates stresses the importance of being specific in what you are buying. "Use meeting room names and a diagram of the space with the rooms circled. And language that says that the group must approve in writing any changes to the space," she advises. "Plus, a contract isn't a place for cute or marketing language. I remember a proposal that was to be signed to become a contract from a D.C. hotel that noted its four-star restaurant and the D.C. cherry blossoms. Legalese isn't needed, but clear, concise terms and language is."
TIP#4 Do not use a contract and an "addendum"
Industry experts agree it is best to use one mutually agreeable document. "Negotiate one complete contract bringing together the terms from each party's document that both parties can agree upon. An 'addendum' is really supposed to be used where there is a contract in place, and something needs to be clarified," explains Lisa Sommer Devlin of Phoenix, AZ-based Devlin Law Firm, P.C. She has practiced hospitality industry law since the early 1990s and opened her boutique law firm in 2003, where she exclusively represents hotel clients regarding convention and group matters, as well as speaking and training for both hotels and meeting planners across the country.
"In a contract to buy 50 bicycles, an addendum would be used to say that 10 will be green, 20 will be blue, and 20 will be red. An 'amendment' is a change made after a contract is signed, like changing the order from 50 bicycles to 40. Most meeting planner documents are neither an addendum nor an amendment, they are pretty much a complete contract in and of themselves. Instead of slapping together two contradictory documents, the hotel contract and the planner's addenda, negotiate the terms into one document that both parties accept."