by Jonathan T. Howe Esq. | February 01, 2013

When meeting professionals have to cancel or otherwise modify programs, often they fail to consider how it can have a tremendous ripple affect across all the contracts that have been created for the event. What follows are some relevant scenarios, each creating problems that could have been avoided.

The Venue Drops Out
A few years ago, an association client was forced to cancel several hotel contracts that were already in place because the convention center the group was planning to use suddenly became unavailable. But none of the hotel contracts had specified that performance would be excused under such a circumstance, and the association couldn't escape the cancellation fees that it had agreed to.

The lesson the association learned was how important it is to take such developments into account in the future, in all contracts pertaining to an event, all outlining what would happen if a critical need is not met.

Details like the unavailability of the convention center, which proved a deal-breaker for the association, are the crux of what needs to be addressed with all suppliers to any event in question.

A Speaker Goes Mum In another situation, you might have a dinner planned that will feature a key speaker. At the last moment, the speaker cancels, defeating the purpose of the evening's program. To limit your organization's liability in this case, provisions written into the contracts for catering, audiovisual, the venue, etc., all need to allow your group to cancel for this cause.

Similarly, if you have to reduce your numbers because attendance is down, you should be able to reduce your needs with your other suppliers, as per your carefully coordinated contracts.

A Hotel Catches FireAs the above examples show, in drafting contracts, we want to make sure that if we are going to reduce liability in one part of the program, we reduce it across the board. A clause outlining a liability reduction should be consistent to all of the contracts associated with that event. If not identical, they should be pretty close.

What is important is that the substance, the material part of the clause, needs to be the same. If in one contract I say I have to have 800 rooms within the city limits, or I have to have access to the convention center, that requirement has to be in every contract.

And by "every contract," I mean agreements with speakers and transportation companies, hotels and catering services, special-event producers, A/V and the like. They all should have the same cancellation/reduction formula built in.

Force majeure clauses, too, should be uniform and consistent throughout. If hotel A goes up in flames but hotel B still is able to perform, you must pay (or use) hotel B, unless it was spelled out that the loss of hotel A also meant you could limit your liability to hotel B.

It comes down to a basic rule of contract construction: Consider those things overall that will cost you money if something goes wrong. Then provide language to minimize the financial risk.