Meetings & Conventions: Planner's Portfolio January
The Law & the Planner
By Jonathan T. Howe,
ACTS OF GOD, REVISITED
New twists to the old disaster clause offer additional
The 1999 Atlantic hurricane season, which
produced five fierce Category 4 storms, caused many a meeting to be
canceled. No one has control over these “acts of God,” so who is
responsible for a property’s lost revenue?
Consider this hypothetical case: The Friendly Insurance Co.
books its incentive trip at Happy Island Resort. The contract
includes the following boilerplate acts of God clause, which has
not been evaluated in a long time.
Force Majeure The parties’ performance under this Agreement
is subject to acts of God, war, government regulation, terrorism,
disaster, strikes, civil disorder, curtailment of transportation
facilities, or any other emergency beyond the parties’ control,
making it illegal or impossible to perform their obligations under
this Agreement. Either party may cancel for any one or more of such
reasons upon written notice to the other.
Then the island is hit by a hurricane. Many roads are
impassable, and the airport is closed. But the resort hardly
suffers. Friendly cancels its program, believing no cancellation
fee is due because the hurricane was an act of God. The resort
feels Friendly owes the cancellation fee, saying the force majeure
provision is not applicable because performance was not
“impossible.” Side roads to the hotel were passable, and an
alternative airport was open to small planes. The resort sues to
recover the cancellation fee.
I am a proponent of having an acts of God clause. The lack of it
could result in a dispute. But in this situation, was there a
failure or inability to hold the meeting?
The key issue is whether the event would have turned out as it
was envisioned originally. A small airport was available, but it
would not have provided the same kind of access to the venue. Also,
the hotel was not in a position to offer the usual amenities either
at the property or in surrounding areas.
To avoid ambiguities, we individualize most acts of God clauses
to concentrate on the integrity of each program. Consider the
following substitute clause.
Force Majeure Either party may cancel this Agreement without
liability as a result of acts of God over which neither party has
control government regulation, terrorism, disaster, strikes of
others than those employed by the parties, civil disorder,
unavailability of transportation facilities consistent with those
in existence at the time of contract, or other factors over which
neither party has any control making it impossible or illegal to
perform materially respective obligations within this Agreement.
Either party may cancel this Agreement with notice to the
The inability, for whatever reason over which either party
has any control, to conduct the program consistent with those
conditions that existed at the time this contract was entered into
shall also be cause. Impossibility of performance shall mean the
inability to conduct the program as originally contracted for full
The parties may, however, agree to go forward on such terms
and conditions that may be negotiated, but such obligation shall
only be in accordance with the Agreement. The inability of
attendees to arrive at the site as preplanned as a result of delays
or cancellations shall also be considered an act of God. Any
deposits made shall be refunded to the party who made the deposit.
Time is of the essence.
What is new? First, the clause defines “inability to perform.”
It does not require 100 percent destruction of services. Second,
either party may cancel for factors that can be controlled.
Everyone involved needs to be specific as to what constitutes
proper reasons for cancellation.
The above clause is designed to inspire further debate. Feel
free to share your opinions.Jonathan T. Howe, Esq.,
is a senior partner in the Chicago and Washington, D.C., law firm
of Howe & Hutton, Ltd., which specializes in meetings, travel
and hospitality law.
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