Writing contracts and negotiating terms with suppliers can be tricky. How do planners protect themselves and their attendees from cancellations? Are attorney fees included? In a recent Smart Meetings webinar, veteran hospitality contracts attorney Lisa Sommer Devlin shared some tips for creating win-win contracts. Here are the contract clauses you shouldn’t do without.
It’s All in the Name
It’s critical to have the full legal name of the party (or parties) who will be writing the check. Unless a party is named, there is no binding commitment. Avoid using the name of the event as the contracting party; it is not a legal entity, and therefore cannot be held responsible if something goes wrong.
Room Block and Rates
Be sure your contract includes a dollar figure and a clearly agreed-to rate of increase from the start. Avoid “no attrition” or “best-rate” clauses. They are not legally required and may make the enforceability of the contract questionable and more complicated.
It’s common in the industry for customers to add a clause saying function space cannot be changed without the hotel’s agreement. But hotels often resist this because they want the flexibility to accommodate everyone and make the most of their function space.
To get around this, Sommer Devlin recommends focusing on the size of the space—asking for a room with a certain ceiling height to accommodate X number of people—and being flexible with other details of the space.
When it comes to damage clauses, it’s always best to agree on a formula or dollar amount upfront rather than argue about it later. Sommer Devlin says it’s better to negotiate amounts at the beginning rather than adding extra terms later. The amounts must be reasonably related to actual damages to be enforceable.
It’s always good to include a dispute resolution provision in the contract. Without one, you might find it very difficult to come to an agreement after the dispute has happened.
Attorney Fees Recovery
While some states provide for attorney fee recovery, not all do, so it’s important to include a clause for attorney fees in your contracts. If you don’t, those fees may come out of the money you collect. Adding a clause to cover attorney fees ensures you are made whole.
Sommer Devlin always recommends arbitration to her clients because it’s cheaper, faster and private (compared to lengthy and expensive court proceedings), and the arbiter is typically a retired judge who knows the law and can often find a fair resolution for all parties. It’s best to discuss with your attorney whether or no arbitration is right for you.