Understanding Difficult Contract Clauses. Tyra Hilliard, PhD, JD, CMP

Transcription

1 Understanding Difficult Contract Clauses Tyra Hilliard, PhD, JD, CMP

2 Disclaimer This session is for educational purposes only. What is discussed in this session does not constitute legal advice, nor does any client-attorney privilege or confidentiality attach regarding issues discussed, publicly or privately in relation to this session. In other words, I m not your lawyer.

3 Housekeeping Be aware of emergency exits Noisy gadgets on quiet Please ask questions, give answers, make suggestions any time! But don t hog the floor. If you have an elaborate question or scenario that is specific to you or your organization, ask afterwards. I encourage Tweeters to tweet (@drtyra) Slip out if you need to. If this is not for you, don t feel like you should stay.

4 Which are the difficult clauses? The ones with the biggest financial risk? Performance Attrition Cancellation Other Force majeure Indemnification Insurance What else?

5 Attrition

6 Would You Sign This? Group agrees that if Group uses fewer room nights than the room block established in this agreement, Hotel will be harmed. Group will be required to pay for each unused room night in the Group s contracted room block at 75% of the confirmed group rate plus tax. The parties agree that this is a liquidated damages clause and not a penalty.

7 A Few Words Make a Difference Group agrees that if Group uses fewer room nights than the room block established in this agreement, Hotel will may be harmed. Group will be required to pay for each unused room night in the Group s contracted room block at 75% of the confirmed group single room rate plus applicable tax up to 80% of the original room block. The parties agree that this is a liquidated damages clause and not a penalty.

8 Other Attrition Issues Room block Who is credited to it? What if it is modified after the contract? What if the planner needs more rooms? Are concessions tied to rooms attrition? Audit

9 Do you need a room block? 50% of planners are booking smaller room blocks 18% have eliminated room blocks 17% more are consider eliminating room blocks Pros & Cons? Alternatives? M&C, May 1, 2012

10 Cancellation

11 Would You Sign This? If Group cancels, Group agrees to pay Hotel $50,000 within 10 days of notice of cancellation. If Hotel cancels, Hotel agrees to pay Group $50,000 within 10 days of notice of cancellation.

12 Cancellation damages calculation calculated by multiplying the negotiated single group room rate by the number of rooms in the contracted block at the time of cancellation, less allowable slippage and comps. Group will have no liability for unused rooms in the Group room block that are resold by Hotel or that remain unavailable for sale over any of Group s meeting dates.

13 No Mo Mo Show The Motivation Show Canceled plans for 2014 Chicago event Increased competition with creation of AIBTM and IMEX America The show has been held (in some form) since 1931

14 could not meet terms of contract. OutsourceWorld 1000 people from 25 countries Marriott Marquis, NY Several major sponsors pulled out and the event organizer couldn t make the payment to the hotel OutsourceWorld filed bankruptcy Attendees had to seek reimbursement through liquidation.

15 GSA Training Expo Cancelled 2013 GSA Training & Expo Conference scheduled for May in Orlando Cancelled due to budget and attendance concerns Coincidentally decided right after sequestration Offering webinars and other online options for training

16 Force Majeure

17 Force Majeure

18 Would You Sign This? The parties' performance under this agreement is subject to acts of God, war, government regulation, terrorism, disaster, strikes, civil disorder, curtailment of transportation facilities, or any other emergency beyond the parties' control, making it impossible or illegal for Hotel to host the meeting in the facility.

19 Make sure reciprocal really is The parties' performance under this agreement, in whole or in part, is subject to acts of God, war, government regulation, terrorism, disaster, strikes, civil disorder, curtailment of transportation facilities, or any other emergency beyond the parties' control, making it impossible, illegal, or commercially impracticable for Group to hold the meeting or for Hotel to host the meeting in the facility.

20 Indemnification

21 Would you sign this? Group agrees to defend, indemnify, and hold harmless Hotel from and against all claims, actions, causes of action, or liabilities, including reasonable attorneys fees, arising out of or resulting from any act undertaken or committed by Group, its attendees, vendors or contractors. Hotel agrees to indemnify and hold harmless Group for any claims, actions, causes or action, or liabilities arising out of Hotel s sole negligence.

22 Beware Sole negligence - a party is the sole and only cause of a result Gross negligence - conscious and voluntary disregard of the need to use reasonable care Negligence didn t do what a reasonable prudent person would have done in the same circumstances

23 Insurance

24 Would you sign this? Group agrees to carry adequate insurance to cover any and all liabilities that may occur in relation to this Agreement.

25 Thank you!

26 Understanding Difficult Contract Clauses Tyra Hilliard, PhD, JD, CMP The University of Alabama