Venue contract wisdom is often woefully insufficient

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venue contractBy Heather Reid

A side-by-side examination of 12 signed and negotiated contracts for booking events into unconventional venues unveiled disturbing discrepancies to me. The “unconventional venue” contracts included the following Canadian locations: cultural centre, city-owned sport facility, entertainment complex, music hall, high-risk recreational facility, heritage facility, aquarium, brewery, two recreational/amusement facilities and museums in three different cities. A wide variety of unconventional venues for sure!

Here are a few of the disturbing findings of my side-by-side review:

Indemnification Clause:

  • 6 contracts – did not have one and therefore, neither side was protected
  • 5 contracts – one-sided indemnification protecting the venue only
  • 1 contract – two-sided indemnification protecting both parties

Question: How is it that 11 of 12 clients found it acceptable to sign contracts that did not protect themselves with an indemnification clause?

Force Majeure Clause:

  • 3 contracts – did not have one and therefore, neither side was protected
  • 6 contracts – one-sided Force Majeure clause protecting the venue only
  • 3 contracts – two-sided Force Majeure clause protecting both parties

Question: How is it that 9 of 12 clients found it acceptable to sign contracts that did not protect themselves with a Force Majeure clause?

Cancellation Clause:

  • 12 contracts – had a cancellation by CLIENT clause with assigned fees to compensate the venue
  • 0 contracts – had a cancellation by VENUE clause with assigned fees to compensate the client

Question: How is it that 0 of 12 clients found it appropriate that, at minimum, the venues didn’t even return their deposits should the venue want to cancel?

And before I move on – here is one of the most unnerving findings: the signed contract for the high-risk recreation venue did not have an indemnification clause protecting EITHER party, nor did it have a Force Majeure clause protecting EITHER party. Just by the very nature of the venue – should the client not be hyper aware of these clauses?

And so when considering both sides, could it really be that:

  • 6 venues did not protect themselves with an indemnification clause leaving themselves fully and unduly exposed to liability;
  • 3 venues considered themselves beyond the reach of a Force Majeure event – the “it won’t happen to me” syndrome;
  • 0 venues had any financial responsibility to their clients should the venue want to cancel an event contract?

venue contractSo why am I highlighting these findings?

I believe the real-world test of our professional body of contract knowledge is most accurately measured when we are working with contracts that are “less than ideal”!

As professional event planners – regardless of whether we are placing our events in unconventional or conventional venues – we must expect balanced venue contracts. And if a balanced and/or complete contract is not forthcoming from the venue – we MUST be capable of negotiating one! Why? It is our responsibility as professionals – our foremost responsibility – to protect our clients and/or employers both from financial risks and logistical situations. And to do this, we must be articulate about, knowledgeable in, and capable of achieving a balanced contract.

A few years back I received the following email from an experienced meeting planner employed by a reputable Canadian organization: “The way I have been brought up in this industry has always been to just reduce the rental and food and beverage minimums, add your concessions, sign and send.”

This took me aback for quite awhile, but in reflecting on it – I realized that this planner operates within the following Canadian context:

  • As a professional body, we do not demand that expertise – beyond basic literacy – in venue contract negotiations be a core competency
  • There is a dearth of planner-directed and planner-provided education on negotiating venue contracts in Canada – so it mustn’t be a priority, right?
  • There are limited “standards of practice” or “best practice” examples for benchmarking our individual expertise
  • There is no “fear factor” overshadowing our work. We do not work within a litigious culture here in Canada, although that doesn’t mean the risks aren’t there
  • There is a perception that we shouldn’t, or we can’t push back on venue contracts
  • We fear, and do not want to acknowledge, what we do not know and what we do not understand

So, here is my call to action for planners:

  • Acknowledge and respect the critical responsibility venue contract negotiations are within our profession
  • Recognize and admit what we do not know and understand
  • Educate ourselves more thoroughly on venue contracts
  • Consistently, constantly – and in the most collegial of ways – negotiate everything in venue contracts

In the not-too-distant future, it would be great if our colleague was able to confidently write: “The way I have been brought up in this industry is to read, understand and articulately negotiate every clause to produce a venue contract that protects and furthers both parties, and creates mutually beneficial business outcomes.”

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