TAKING CONTRACTS ABROAD

Meetings & Conventions: Planner's Portfolio August 2002
August 2002 PLANNER'S PORTFOLIO:

The Law & the Planner

By Jonathan T. Howe, Esq.


TAKING CONTRACTS ABROAD

What parts of your U.S. agreement apply when you hold the meeting overseas?

When a meeting is scheduled outside the United States, many planners panic, afraid the contract clauses they’re used to won’t be applicable overseas. Can U.S. agreements be exported? The answer is “maybe.”

REWRITTEN RULES
Some of what is included in contracts within the U.S. has little or no legal applicability to offshore programs, but there might be a practical reason to include them.

For example, a clause addressing the Americans With Disabilities Act has no applicability outside the United States. Nevertheless, meeting professionals might wish to include provisions as to accessibility on the part of the facility they have chosen. Some countries now mirror the requirements of ADA in their own business dealings.

Also, the issue of liquor liability might be handled in an entirely different way overseas. While the standards we are used to might not apply in the country where the event is being held, you should still insist that the agreement include certain basic responsibilities on the part of the provider and server. On the subject of music use, in the United States the sponsoring organization has the responsibility to obtain the license. Elsewhere in the world, it is generally the facility that has the licensing obligation.

DOLLAR QUESTIONS
Deposits, while not a normal requirement in this country, do take on a different role for international programs. For example, some hotels in Europe and elsewhere will insist on a deposit of up to 100 percent before the program begins.

Questions always arise as to how meeting professionals should handle this while protecting the monies their organization has put forward should the hotel or facility be unable to meet its duties under the contract. There are two possible steps planners can take: Either establish an escrow account or provide for a standby letter of credit.

In an escrow account, you deposit 100 percent of the required funds. An agreement is then signed by the depositing party and the requiring party. An escrow agent holds the funds, subject to the terms and conditions of the agreement.

These deals can be complicated by such issues as whether the supplier performed its services adequately. When there is a dispute, the escrow agent might refuse to release the funds until all issues are resolved.

The second alternative is the standby letter of credit. This is simply an agreement with a bank or financial institution that it will guarantee financial performance should the defaulting party who provided the standby letter of credit (your organization) fail to meet its obligation to pay. Similar to an escrow agreement, the standby letter of credit does delineate the obligations of the supplier. Should service fall below the standards set in the agreement, the standby letter will not be dispersed. A standby letter of credit’s advantage is that no monies need to be put forward before the event. There will be a service charge of 1 or 2 percent of the total value of the letter. Normally a standby letter of credit is backed by an account, line of credit or similar security held by the bank that issues the letter.

ASK FOR HELP
When planning an event offshore, doing one’s homework is key. Negotiation strategies are different, terminology is not the same and the culture is not generally what we are used to dealing with. Always seek out competent advice both from the business as well as the legal side. While we can export our meetings, our rules might not survive the trip.