. Strengthening 2021 Hotel Contracts | Successful Meetings

Strengthening 2021 Hotel Contracts

Shore up the force majeure wording in your event agreements with a frustration-of-purpose clause.

Meeting professionals still are cancelling and rescheduling events as the Covid-19 pandemic continues to play out, and they have often relied on their force majeure clauses to try to limit liability. 

To many planners' surprise, however, effectively using this clause to excuse contractual obligations depends on how well the clause's requirements were spelled out in the first place. 

Happily, another clause can help. A strong frustration of purpose can work with force majeure to spell out how to cancel or postpone gatherings because of the coronavirus or another unforeseen event. 

Understanding force majeure better

Most industry professionals have never had to resort to their force majeure clause, and the legal concept is not well understood. 

At its essence, force majeure extends or excuses a party's performance because of events that make that performance impossible. It usually focuses on an uncontrollable and/or unforeseeable intervening event — think hurricane — that prevents a party from meeting its contracted obligations. 

In court, force majeure clauses tend to be read very narrowly, carefully assessing whether the force majeure event is sufficiently covered under the clause's terms. These days, a force majeure clause that doesn't refer to pandemics, epidemics, outbreaks of infectious diseases, etc., would likely not be interpreted by a court as covering a party's request to cancel. 

Clauses working hand-in-hand

Frustration of purpose wording along with a properly drafted force majeure clause make a very powerful combination. 

A common-law concept, frustration of purpose relates to the impracticability of going forward with an event, and states that the contract can be voided if the meeting can be performed but it would be pointless to do so. For example, if an event's purpose is to have a particular speaker appear, but she can't get there, then the purpose is "frustrated." While the rest of the event could go on, the purpose has been thwarted. 

While this might sound similar to the uncontrollable acts that trigger force majeure situations, the bar isn't as high to produce a frustration-of-purpose situation.

Melding with other contract clauses

Take a "belt and suspenders" approach to marry these tools. Lay out the reason(s) for your event (whether to showcase a speaker, have

X number of attendees participate in specific workshops, etc.) and specifically state that those reasons are the "purpose" of the event. Include language that any incident preventing fulfillment of this purpose that is beyond the reasonable control of a party to the contract will excuse that party's performance. 

Next, draft the force majeure clause properly. Don't just rely on the old standbys of civil unrest, war, labor shortages, disasters, etc. that make a party's performance illegal or impossible. Enlarge the list of possible events to include CDC warnings and pandemic levels; local, state and federal regulations; and travel or group-size restrictions that might prevent or impede attendance, or make it commercially impracticable without necessarily making such attendance (and, thereby, your performance under the contract) impossible. 

Finally, get your cancellation clauses into proper shape. Reference the other two clauses by stating that, if performance is excused for any reasons permitted under force majeure and/or frustration of purpose, a party can cancel and reschedule the event without penalty or further liability. Tie together all three clauses to maximizes your flexibility to cancel and/or reschedule your event.

William Bruce Cox is vice president of business development and general counsel for Cox Event Consultations Services LLC.