SHARING THE BLAME 5-1-2001

Meetings & Conventions: Planner's Portfolio May 2001
May 2001 PLANNER'S PORTFOLIO:

The Law & the Planner

By Jonathan T. Howe, Esq.


SHARING THE BLAME

Some clauses should be reciprocal, stating responsibilities of the planner and the hotel

Planners often ask me whether certain contract clauses should work both ways. After all, they’re making a lot of promises; shouldn’t the hotel also face consequences for not living up to its half of the bargain?

At one time many hotels did insist on one-way provisions, but today most recognize that setting forth mutual responsibilities and benefits to each party makes for good contracts and a good business relationship.

TIT FOR TAT
Several clauses should be reciprocal in all contracts.

Indemnification. These clauses basically hold harmless, indemnify and defend one party if a claim is brought as a result of the other’s negligence. A mutual indemnification provision states that each party will indemnify the other if any act or omission alleged on the one party’s part leads to a lawsuit or a claim against the other.

For example, if an accident strikes an attendee because of the hotel’s negligence, the tendency is for the injured party to sue everyone he can, including the meeting host. At the outset of most cases, no one party is assumed to be solely at fault the liability is shared. During a lawsuit, all parties are examined for their contribution to the accident. In the end, one party might be held liable for the entire amount of any judgment if found responsible for the harm done, or the judgment can be split between parties by percentage of liability.

Indemnification clauses help protect against being found culpable for someone else’s negligence. A good clause requires the indemnifying party (say, the hotel) to provide a defense for the indemnified (the host organization) to any claim made.

By not writing “defend” in the clause, a party who is later found to have no liability at all will still have to pay to defend itself, then be reimbursed after the judgment.

Americans With Disabilities Act. As the law is designed, failure to spell out the responsibilities of each of the parties makes both liable for any violation of the ADA.

We always include a provision that ADA compliance by the meeting venue will be “readily achievable” in all areas over which it has control or primary legal responsibility. Compliance by the meeting host, in turn, will be “readily achievable” for all ADA requirements in areas and during programs over which it has control.

Cancellation. Planners might want to have a clause outlining a fee to be paid should either party cancel an event. Here the cost to cancel should be on a par. The key is to delineate the figure as a fee, not liquidated damages. This way there is no obligation on either party’s part to mitigate any loss such as the property reselling hotel rooms, or the planner valiantly trying to find a new venue.

Insurance. This is always reciprocal, but it can be tricky. For example, in dealing with a government-owned convention center, you will be obligated to provide insurance covering its negligence as well as your own. When dealing with commercial vendors such as a transportation firm, your organization should be coinsured on the vendor’s insurance policy. In this case, be sure to get a rider that names your organization as coinsured and requires the insurance carrier to notify you if that policy lapses.

Attrition. This clause should be reciprocal, requiring the host organization to pay a fee or percentage when attendance does not meet the room block as well as requiring the hotel to give credit for rooms that it resells.

For more on attrition, see "The Most Contentious Clause." To view sample ADA and indemnification clauses, click on “Legal Issues.”

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].

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