contracts: the basics - meetings today · guest rooms in the group’sroom block and rebook the...

Contracts: The Basics

Presented by

Joshua L. Grimes, ESQ.Attorney at Law

Grimes Law Offices, LLC.

Moderated by

Tyler DavidsonChief Content Director

Meetings Focus

Wednesday, October 8, 2014

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Today’s Speaker:

Joshua L. Grimes, ESQ.Attorney at Law

Grimes Law Offices, LLC.

[email protected]

mailto:[email protected]

Learning Objectives

• Identify the most-common pitfalls to avoid in the contract phase

• Know what is on, and what may be off, the table when negotiating

contract clauses

• Identify crucial clauses you may want to include in your contracts, to

protect yourself and the organizations you plan for

• Learn about some of the more-recent contract issues that have come

to the fore in the last couple of years

CONTRACTS:

THE BASICS

JOSHUA L. GRIMES, ESQ.

Grimes Law Offices, LLC

Copyright 2014 Grimes Law Offices, LLC

©2014 Joshua L. Grimes, Esq.

This presentation is for informational purposes only and does not constitute legal advice. The sample contract clauses are for illustrative and educational purposes only. Those seeking legal assistance are directed to seek advice from a competent attorney of their choosing.

Negotiating Strategies

• Remember that “Everything is Negotiable”.

• Set Negotiating Priorities –

– What Terms Must You Get?

– What Provisions Are Desirable, But Not

Mandatory?

• Keep Bargaining Power Until Contract Signed.

• Consider Future Contingencies.


Contracting Rules

• Understand Everything in Contract.

• Put Entire Agreement into Writing.


Room Rates

• “A La Carte” Pricing.

• Specify What’s Included.

• No Additional Fees Provision.

• Negotiating the Best Rates.

• Pricing Compared to Internet Discounters.


Sample Extra Charges Provision

The room rate(s) and other charges and fees specified inthis Agreement (plus applicable taxes) shall be the onlymandatory fees or charges assessed by the Hotel in orderfor the Group’s guests to check into a guest room. Unlessotherwise agreed by the Group in advance (in thisAgreement or elsewhere), the Hotel may not require that aguest pay a mandatory “resort fee”, telephone surcharge, orany other additional amount in order to obtain a room(though such charges may be imposed with the agreementof Group (in its sole discretion) at reasonable rates forservices actually rendered).


Attrition / Performance Damage

Clauses• Traditional Attrition & Cancellation:

– Room Block Commitment.

– Permitted Slippage.

– Customer Paid Lost Profits as Liquidated Damages

on Each Empty Room.

• New Variation:

– Hotel Places Agreed-Upon Minimum For Rooms and

F&B Spending.

– If Minimum Not Achieved, Group Makes Up

Difference.Copyright 2014 Grimes Law Offices, LLC

Attrition: Things to Consider

• How Many Rooms in Rooms Commitment? What if

Number Adjusted?

• Deduct “Free” Rooms from Block.

• Keep Concessions if Paying Attrition Damages.


More Things to Consider

• If Using “New” Approach, Agreeing on $ Value of

Rooms Commitment.

• Is There Be a Duty for the Venue to Rebook & Credit

Group?

• Need to Audit & Verify That All Group Members

Counted in the Block.

• Remember: Verify Charges for Accuracy!


New Hotel Performance Damages

Clause – Revised“The Total Sleeping Room Nights Reserved on page 1 of

this Agreement will generate $53,523.36 revenue for Hotel

(“Anticipated Room Revenue”). In the event that Group

does not use all of the sleeping rooms in its Room Block,

you agree that the Hotel will suffer damages. Therefore,

the parties agree that if the contracted event is held as

scheduled, Hotel will not seek damages for Group’s failure

to use and pay for the Total Sleeping Room Nights

Reserved if Group achieves a minimum of 80% of the

Anticipated Room Revenue ($42,818.69).


New Hotel Performance Damages

Clause (2)Should Group fall below this amount, Group agrees topay to Hotel as reasonable liquidated damages and nota penalty, 70% of the difference between 80% of theAnticipated Room Revenue and the actualized guestroom revenue received by Hotel for rooms used and paidfor as part of the official Room Block, plus any applicabletaxes as a reasonable estimate of the Hotel’s losses onsleeping rooms.”


Resale Clause

“Hotel shall make reasonable efforts to resell unusedguest rooms in the Group’s room block and rebook thecancelled food and beverage events. Any damages duepursuant to the Performance or Cancellation clauses willbe reduced by the revenue received from unused Groupguest rooms (as calculated in this section) and food andbeverage events that are resold by Hotel. The partiesagree that “resold” rooms will be calculated as follows:The resale revenue credited to attrition or cancellationdamages for each room will be equal to the Group’ssingle room rate for each day that guest rooms areresold.


Resale Clause (2)

Unused Group rooms will be the last guest rooms resold,

thus guest rooms will be considered resold to the extent

that Hotel is able to sell more guest rooms than it could

have sold if the Group had fully occupied its reserved

block. For example, if the Group does not use thirty (30)

rooms in its block but only ten (10) rooms remain unsold

in Hotel, the attrition or cancellation damages owed will

be reduced by the average daily rate times twenty (20).”


Force Majeure /

Excuse of Performance Cancellation

• Force Majeure Traditionally Covered Only Limited

Situations Where Meeting “Impossible or Illegal” to

Perform.

• Occurrence Was Outside Parties’ Contemplation At Time

of Contract.

• Now Typically Include Much More – Cancellation For

“Impracticability” As Well.


• 2 Different Perspectives:

– Suppliers: Can I Perform? Is My Facility Standing?

– Planners: Will My Attendees Show Up?


Force Majeure /


• Cancellation For “Labor Disputes.”

• Bad Weather.

• Disease.

• Terrorism / Acts of War / Civil Unrest.

• Does the Group Have Particular Sensitivities?

– Economic Sensitivities.

– “Moral” Convictions.


Force Majeure /


Sample Force Majeure / Excuse of

Performance Provision“Should events beyond the reasonable control of eitherHotel or Group occur, including, but not limited to acts ofGod, war, strikes/labor disputes/labor unrest (except thoseinvolving Hotel employees, contractors or agents),governmental regulation, civil disturbance, terrorism,disaster, fire, earthquakes, hurricanes, unreasonableextreme inclement weather, curtailment of transportationfacilities, public utility failure, declaration of a “Severe” riskof terrorist attack by the U.S. Department of HomelandSecurity,


issuance of a travel advisory for the region in whichHotel is located by the World Health Organization, or anyother comparable condition, making it inadvisable, illegalor impossible for either Hotel or Group to perform theirobligations hereunder, the affected party may cancel thisAgreement without liability for any one or more or suchreasons upon written notice to the other. In addition, alldeposits and pre-payments made by Group or its guestsshall be promptly refunded.”



Performance Provision (2)

A party seeking to cancel because performance has

become “inadvisable” must provide reasonable evidence

that events outside its control and reasonable

anticipation caused at least 30% of expected attendees

(based on meeting history) not to register for the Event,

or registered attendees to cancel their registrations.



Performance Provision (3)

Commissions

• The Issue: When Are They Payable? When Should They

Be Withheld?

• Commissions Earned When Rooms Filled; Payable

When Customer Pays.

• Check Contact Language Carefully: Should Payment be

Withheld Until Paid in Full?


Hotel Quality Standards

• Issue Related to Meetings Booked Years Out.

• Will Hotel Remain the Same Quality For Years After

Contracting?

• Is A Quality Standard Part of “the Deal?” Maybe …

• What About Hotel Sale / Rebranding?

• Possible Breach of Contract For Failing to Maintain

Quality or Re-Branding.


• Include Contract Provision Making Hotel Quality & Brand

Material to Deal.

• Setting “Objective” Standards is a Challenge.

• Tie to Mobil / AAA Ratings At Time of Contracting.

• Use Hotel Photos / Take Pictures.


Hotel Quality Standards

Hotel Quality Standards (2)

• Add Staffing Requirements if Appropriate.

• All Facilities to Be Open & Available.

• Keep Vigilant on Hotel Upkeep, Renovations, Guest

Comments.


Alcohol Liability

• Alcohol Consumption Major Issue.

• Party Serving / Furnishing Alcohol Should Bear

Responsibility For Injury/Damages.

• Include Contract Provision Absolutely Prohibiting Service

to Those Legally Unable to Drink.

• Require Servers to be Licensed if Required.

• Indemnification.


Cyber Security

• Issue: Valuable Data on CDs, DVDs, Wireless Networks

Vulnerable to Theft and Hackers.

• Ask About Previous Incidents at Facility.

• Ask A/V Provider to Protect Wireless Data – Put

Specifics in Writing.

• Negotiate For Appropriate Indemnification.


Cyber Security (2)

• Contract Provision Requiring Updated Security Software – Antivirus, Anti-Malware.

• Instruct Attendees on Protecting CDs, Laptops; Consider Extra Security.


Questions & Answers

JOSHUA L. GRIMES, ESQUIRE

(215) 772-5070

E-Mail: [email protected]

Web: www.GrimesLaw.org

Joshua Grimes JoshuaGrimes

Grimes Law Offices



http://www.grimeslaw.org/

Joshua L. Grimes, ESQ

Attorney at Law

Grimes Law Offices, LLC. [email protected]

Tyler Davidson

Chief Content Director

Meetings [email protected]

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Contracts: The Basics

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