Meetings & Conventions: Planner's Portfolio September
The Law & the Planner
By Jonathan T. Howe,
WHAT MAKES A CONTRACT BINDING?
Creating a legal agreement requires a lot more than simply
sealing a deal
Every day I am guaranteed a phone call from a client who begins
by saying, “Jon, I have a contract...” My general response: “Don’t
assume you do.” Whether a contract exists is a legal conclusion
that has to be decided based upon a series of facts. Too often,
what people think is a contract is nothing more than an agreement
to agree, or even worse, just a straw in the wind to see if there
might be a deal. Let’s define the basics.
THE EYES OF THE LAW
A contract, in legalese, is an agreement between competent parties
based upon the genuine assent of the parties supported by
consideration made for a lawful objective and in a form required by
law. Here’s the breakdown of that unwieldy sentence to see what it
Agreement. An “agreement” is an offer and an
acceptance. The offer must be made in a way that expresses a
current intent to enter into a contract. It is specific; it is
definite; it is concise. What each party will be required to do and
the benefits each will receive are clear.
The party making the offer controls the method by which it may
be accepted. In other words, if you want to have an acceptance
within a certain period of time, that is stated in the contract. If
you want to have acceptance by fax, you so state. If you want
someone to stand on top of a building and wave his hands over his
head at noon on a given day, you so state. If you say nothing about
how the offer needs to be accepted, generally it can be accepted in
the same manner in which it was made.
The acceptance must be unequivocal and must be consistent with
the offer. Changing any of the terms of the offer is considered a
counteroffer and a rejection of the initial offer. If you continue
to negotiate after the offer is made, you are then in the process
of trying to create a new offer and acceptance scenario.
Parties. The term “competent parties” indicates
both sides have the authority and the capacity to enter into a
contract. Authority is based on the position of the individual, and
capacity means he is of legal age and legally competent mental
Assent. The assent of the parties must be
manifested in accordance, as noted, with the terms and conditions.
Often the hotel sends a proposed contract that really is only an
offer, and the meeting planner begins to make changes on it,
striking items, revising terms, initialing the changes and sending
it back to the hotel thinking there is a contract. It’s not it’s a
counteroffer. There is no contract until and unless the hotel has
accepted those changes.
Consideration. This term means the contract
holds a benefit and a detriment to each of the parties.
The issue here is whether one party has no obligation to
perform, and the burden is on the other party. If that is the case,
there is no contract. For example, I have often wondered, in a
contract that states the meeting planner can get out of it a year
out without liability, if there is sufficient consideration for the
hotel to abide by the rest of the contract terms. If there is no
burden on the planner, could the hotel easily walk away from its
supposed obligations without liability? In spite of my musings,
consideration generally is not an issue.
Objective. “Lawful objective” merely means what
the parties are agreeing to is not a violation of the law.
Form. Contracts can be either oral or written,
but in the meetings industry they should be in writing. Because of
a legal rubric, the Statute of Frauds, many oral contracts are
unenforceable. Without a contract that meets all of these
requirements, neither party is legally obligated to do anything,
except perhaps to honor their word in good faith.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. Legal questions can be e-mailed to him at email@example.com.
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