Editor’s Note: This article is provided for general information purposes and does not constitute legal advice.
COVID-19 has wreaked havoc on the meetings and events industry – that’s no secret. And among the cancellations and postponements, more event professionals are looking closer and harder at something that would barely get a second look before – contracts.
That’s right. Event professionals everywhere are looking very closely at contracts they’ve had with venues and suppliers and noticing holes they missed before anyone knew what Coronavirus even was.
We reached out to Heather Reid, CEO and founder of Planner Protect, an Ontario-based contract review agency that negotiates event contracts for organizations and those hosting events, to talk us through some clauses that event planners should be aware of and what the future might look like when it comes to event contracts.
Right now, the buzzword in the event world is force majeure, which as Reid explains, is a contract clause that allows either party to terminate a contract without damages or liability due to extenuating circumstances.
“A force majeure can only be triggered if fulfilling the contract has been rendered impossible or commercially impracticable because of circumstances beyond the control of either party,” Reid explained.
So right now during COVID-19, Reid said, where there is a limit on people gathering in groups – that could be enough to trigger a force majeure because it is impossible to host a meeting or event right now.
What’s for sure, said Reid, is that we will be seeing more rigid force majeure clauses in contracts than we ever have before.
“In fact, I’ve heard that a colleague received force majeure language that was almost a page long,” she said. “I think this entire situation has finally given force majeure and other clauses in contracts the reverence that’s always been due. In Canada, especially, we have been complacent when it comes to contracts because we rarely have the threat of lawsuits. But, regrettably, now people are seeing first-hand the impact that a poorly-worded contract or clause can have on a business or event host.”
The future of contracts
A tip from Reid to consider in your next contract is to watch your force majeure language.
“It is my understanding that no future contract will ever say ‘In the event of COVID-19,’” said Reid. “Sometimes we see contracts that have specific acts of God, like hurricanes or floods, and now we will need to include pandemic, as well the phrase, ’but not limited to.’ We don’t know what to anticipate, so we have to make sure the language in our contracts and clauses is all-encompassing.”
Reid added that it’s important going forward to leave nothing vague in a contract.
“For example, don’t leave costs ‘to be determined,’” she said. “We need to be more mindful about pricing for everything. Even the word currently…sometimes we see ‘currently the gratuity is…’ Well, anything like that planners are going to need to negotiate the actual pricing and put that in the contract. You want to make sure to lock it in so that planners aren’t unnecessarily paying increased costs.”
And finally, her last piece of advice to event planners is one that could save them thousands of dollars.
“Consulting with experts and budgeting for legal counsel to review contracts,” she said. “Even if it’s a few thousand dollars for expert opinion and legal counsel, it’s an incredible investment compared to cancellation fees or unexpected risks. Hosts and venues have lost so much money during this time, so investing in expert opinion and legal counsel to create better contracts would be recommended for everyone.”
At the end of the day, Reid said she believes it’s a good thing that event planners are paying close attention to their contracts these days.
“I know this has been an unprecedented and difficult lesson for everyone on how important contracts and clauses really are, and I hope we never return to a sense of complacency,” she said.