KEEPING YOUR CONTRACT FLUID

Every so often we get a call from a client stating that a current contract is no longer “working.” This generally means that the meeting planner is facing a small disaster, perhaps as a result of making reductions in the room block, encountering budget cuts or other unfortunate circumstances.

The question planners should be asking me is, “Can we renegotiate?” The answer is yes, you can but don’t expect to have any clout in the process. Failure to perform (in this instance, by the meeting planner) is a breach of contract, for which the law will allow the nonbreaching party (the supplier) to be compensated.

So, be prepared to give up something to get what you need. In most cases, money in some form will be exchanged for concessions.

ALLOW FLEXIBILITY
Of course, such contract-related roadblocks are best avoided. To achieve that, all your agreements should allow you to make changes as the date of the program approaches. Most attrition clauses, for instance, don’t allow for realistic re-evaluations as the meeting date approaches. Insist on it. The contract should set forth review periods and offer opportunities for reductions or increases to the block as needed, to be mutually agreed upon by both the planner and the supplier. These provisions for adjustment help organizations avoid being assessed outrageous attrition fees.

When dealing with vendor and facility contracts other than hotel agreements, such as those for outside events, include a provision stating that you have the opportunity to reduce or cancel, based on the current status of the program.

For example, contracts for a tour of the host city usually stipulate that the event will take place depending on the number of people who sign up, but often the guarantees are made without the opportunity to adjust the commitment. The same is true for F&B agreements and other arrangements. Never sign papers that allow the other party to penalize you without your consent, whether you are supplier or planner. The key in the ability to change or alter obligations is to provide “wiggle room,” by which both parties know up front what flexibility exists within the terms of the agreement. Once those terms are superseded, neither party should allow the other unilaterally to make changes.

Other contract areas that might need changing after the agreement has been signed concern unforeseen circumstances. For example, a new product launch has been arranged, but the product is not ready to be shown. Similarly, the contract should be specific up front. Should a situation like this occur, cancellation or other changes without liability are OK up to a certain date if they’ve been written into the contract from the beginning.

CHECK FOR FRESHNESS
Another issue to consider is how old the contract itself is. Too often, I hear planners say, “It’s worked well for us all these years. Why change it?”

Boy, if there ever was a trap for the unsuspecting, this is it. What worked six months or even six weeks ago probably doesn’t work now. Particularly since Sept. 11, conventional wisdom has changed. Force majeure clauses are now in fashion. Before that tragic time, they were inserted in contracts, but no one was really sure why. Today, the clause is a major item in negotiations.

Just as each meeting or event is unique, contracts should not be static. They are strategic documents that need to be reviewed carefully for each program to be sure they fit the needs of the particular meeting.

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 protected].