Tucked into many contracts
• "Incorporated by reference" clauses add vagueness to your contract. Get the full information written out.
• These clauses can cover arbitration, local laws, union compliance and more. Even if incorporating the information means adding pages to the contract, spell it out.
• Beware of clauses covering data privacy and marketing. Don't sign if it means you are giving the hotel permission to mine attendee data.
is a species of paragraphs called "incorporated by reference" clauses, which can get meeting planners into trouble if they sign the contract without investigating what the clause is binding them to. Dispute Resolution
A common reference provision deals with how a case will be arbitrated if there is a contract problem. The clause reads something like, "In the event of any dispute arising out of this agreement, it shall be settled in accordance with commercial rules of the American Arbitration Association." What this signifies is that those rules are now just as much a part of the contract as if they were written out in their entirety.
But what does that really mean? One of the tricky elements is that only the rules themselves are incorporated; the clause does not necessarily mean that the American Arbitration Association would conduct the arbitration, only that its rules would govern the arbitration process. It's best to spell out how, where and when such an arbitration would take place and who would actually oversee the process.Vague Hotel Rules
Another scary clause states: "The rules, regulations and policies governing the hotel are incorporated by reference in this agreement." Signing a contract with this sentence in it means you've bought the whole nine yards, sight unseen. How can that affect your meeting?
In one instance a few years ago, a meeting professional was confronted with having to pay local union musicians, although the only music at the event was performed by a nonunion barbershop quartet. The hotel's union contract stated that in the event of any "live performance of music," union musicians must be used or compensated for a performance, even if they were not the performers. Incorporated by reference were "applicable union contract requirements." Again, don't sign until you know exactly what this clause will really mean to your event.
Similarly, the contract might require your agreement to abide by all laws governing the venue -- far too broad a statement. What are the pertinent laws and how might they impact your program?
In offshore agreements, the clauses might seem short, but always watch out for the incorporation by reference of the "standard terms and conditions." In some countries, getting the actual information could add hundreds of pages to the contract. And that's OK.
Any time you don't recognize or understand a contract clause, ask. Those incorporated items should be provided to you in full so you can determine whether they are acceptable or if they will harm your group.
Jonathan T. Howe, Esq., is a senior partner of the Chicago, St. Louis and Washington, D.C., law firm of Howe & Hutton Ltd., specializing in meetings and hospitality law. E-mail questions to him at firstname.lastname@example.org.