By Mark Roysner, Esq. Law Office of Mark Roysner Legal Consultants to the Meetings & Exhibition Industry 22287 Mulholland Hwy., Ste 382. Calabasas, CA 91302 Tel. 818-224-8095 Fax 818-222-6236 roysner@roysnerlaw.com Copyright 2015. Mark Roysner, Esq., Roysner & Associates. All rights reserved.
QUICK CONTRACT CHECKLIST 1) NAME AND CLEAR IDENTITY OF THE PARTIES a) Define the degrees of responsibility between these separate entities. i) Identify all parties named in the contract correctly (i.e. corporations, partnerships, etc.) 2) DEFINE PURPOSE OF EVENT OR SERVICES TO BE RENDERED a) Clearly state the purpose and scope of the contract. 3) RIGHTS AND OBLIGATIONS a) Always, no matter how tedious it may be, Very Carefully read the entire contract and all attachments and documents incorporate by reference (i.e. facility rules and regulations, etc.). i) Once the contract is signed, these terms will become legally enforceable, unless they are held invalid by a court later, with all its associated cost. ii) Always know what powers and rights the facility will have over organization. iii) Always determine what your legal obligations and potential liability will be before signing the contract. iv) Can the event survive under the contract terms in the case of a breach of contract? 4) DESCRIPTION OF THE SERVICES TO BE PROVIDED a) Describe the services to be provided. b) Make sure all addendums, exhibits, timetables and schedules are attached to the signed contract outlining all specifications as agreed upon. c) Define if services will be provided on an exclusive basis non-exclusive basis. d) Add provisions protecting the organizations intellectual property and trade secrets. e) IN FACILITY CONTRACTS: i) State guaranteed minimum and maximum square footage of area to be used. ii) Specify dates by day and daily hours of anticipated use, including move-in/out. iii) Designate type of use for all areas. iv) If possible, add a provision defining under what circumstances, and how 2
organization will be compensated if the facility moves the event to an alternate hall or a different set of dates. v) If the need for additional space is foreseeable, add a clause into the contract that the Facility will offer organization right of first refusal of additional space. vi) Include provisions protecting the organization against competitive events or services within a specified period if using a facility. vii) If the facility defines their hall and meeting rooms by type of activity, find out if they restrict any other type of activities than those specified. viii) Determine when the hall requires a final commitment on meeting room space. ix) Ask if there will be a charge for space cancelled or not used. x) If so, specify the latest date that space can be dropped without a penalty fee. xi) Ask if there is any sales or excise tax on rental fees, space sold or other exhibitors' sales activities. xii) Ask the facility to provide a list of the city and state agencies to obtain the necessary permit applications and schedule of fees. xiii) Ask if the facility requires a performance bond or any type of guarantee. 5) CLEARLY DEFINE COST AND EXPENSES (RATES) OF SERVICES/FACILITIES a) Clearly define the cost of all services to be provided or include a formula to define future costs and expenses. b) Always define the deposit and payment schedule, both in terms of due dates, and amount per installment required. i) Define type of payment schedule and how it is to be calculated. (1) Single lump sum. (2) Initial deposit plus periodic installment payment schedule. ii) Negotiate and specify in contract when the final balance is due. (1) Prior to event, first day of event, at close of event, etc? (2) Is there a discount for early prepayment? (3) Ask if interest is paid on deposits. iii) Find out if interest is charged on over due payments. c) IN FACILITY CONTRACTS: 3
i) Indicate whether the basic rental is per net square foot for the entire term of lease or per day. (1) Include formula of calculation of net square footage. (2) Include all special rates if different form basic rates for profit vs. non-profit exhibit space, registration space, meeting and general session space, etc. (3) Include the guaranteed minimum or hall buy-out rate. (4) Include move in/move out dates and times, and rates if there is a separate charge. ii) Know in advance what common, or public, areas in the facility organization will not have control over, and who has access to those areas. iii) Determine if a security deposit/damage deposit is required before move-in, and if so how and when the deposit will be refunded. iv) If contract is based on a percentage of income, determine what flat rental fee you will be charged if gate receipts fall below the anticipated income. v) Include what the facility provides as their basic set-up of meeting rooms. (1) Determine if they are bare, or include chairs, type of set-up, risers, draping of tables, podiums, microphones, etc. vi) If the contract includes some items in the basic cost, but organization needs to rent additional equipment, determine if you must rent additional equipment from the facility or can the equipment be obtained through an outside independent contractor. vii) Get a rate schedule for additional items beyond the maximum. d) Ask what the charges are for re-setting rooms during occupancy. i) Negotiate separate re-set rates for theater style, classroom style, and general sessions when possible, since the labor required involved for each varies. e) Determine if there any extended use charges for failing to return the authorized areas at a specified time. 6) DEFAULT AND/OR BREACH OF CONTRACT a) Breach of contract can be a two-way street. Do not get caught with a one-way contract. Clearly definite what remedies will be available to each party in case of a breach. i) Specify the Cancellation policy. 4
ii) Always include a Facilities Construction and Refurbishment, Remodeling Clause in facility contracts iii) Include a Double Booking Policy Clause in Hotel contracts (i.e. reverse attrition). iv) Include a detailed attendee walk/relocation provision in Hotel Contracts. Make sure the Hotel cannot use this as a last minute contract cancellation provision. b) Know the contracts definitions for default and termination. i) Make sure the default and termination provisions are limited, to "justifiable" or "reasonable" cause. ii) Know the last cut-off date when the contract can be terminated without default. (1) Know under what conditions organization remains liable for balance of rates if the contract is terminated after this cut-off date. c) Determine how the parties are prepared to cure a default of breach or mitigate damages in case of termination, default or actual damages provision. d) Review the Liquidated damages clause, if it is used as a penalty, it is invalid. i) Define what the liquidated damages are in case of a default. ii) Ask if the show forfeits payments already made, as liquidated damages. e) Make sure organization will not be held liable for consequential or incidental damages in the case of default or termination. f) Check to see if the contract has the defaulting party paying the other party s legal costs and attorney fee associated costs for litigation in a legal action. i) Weight the benefits of placing a provision in the contract that parties will pay their own legal fees in the case of litigation against including a provision assigning a prevailing reasonable legal fees will be paid by the losing party. ii) Define what types of defaults allow for re-entry in facility contracts. (1) Are these defaults minimal or substantial? Do they materially affect the essence of the contract? iii) Is there a co-dependency and unavailability with other vendors or facilities that need to be addressed in the case of a breach or termination of one contract? How will this affect organization s other contractual obligations? iv) Address issues pertaining to changes in management, branding or ownership. v) In facility contracts add a provision addressing the possibility of deterioration of services or physical condition, construction, renovation, and remodeling, 5
7) FORCE MAJEURE - EXCUSED NON-PERFORMANCE- ACTS OF GOD a) Make sure the Force Majeure clause is a bilateral agreement that protects organization as well as well as the facility. b) Define the types of reasonably unforeseeable occurrences or uncontrollable events that could make performance commercially impractical, impossible or illegal. 8) INSURANCE REQUIREMENTS a) Determine what are the amounts and types of insurance are required. i) Comprehensive general Liability (i.e. umbrella policy, broad form, limited) ii) Workmen's compensation/employer liability. iii) Automobile liability. iv) Fire, legal or extended coverage should be facility's responsibility. b) When applicable, the parties should each name the other party as an additional insured in their respective insurance policies indemnification and hold harmless clauses, as applicable. In certain vendor services contract unilateral indemnification of the organization may be preferable. c) Determine all additional insured or indemnities required. d) Find out if there are any specific insurance certificates or applicable licenses required. e) Whenever possible limit show s responsibility to your own willful and negligent acts. f) Avoid conflicts between your insurance and hold-harmless/indemnity provisions. g) Determine if there is a provision waiving your insurers' rights to subrogation without mutuality of waiver and approval of insurer in the facility contract. h) Read waiver provisions carefully to avoid releasing legal protections that might otherwise pertain. 9) INDEMNIFICATION/HOLD HARMLESS a) This clause secures the named party (usually the facility) against loss or damage caused by another. i) It also gives security for the reimbursement of the facility in case of an anticipated loss falling upon it. ii) It makes Organization responsible for the reimbursement to the facility s costs, 6
both for legal fees and judgments for the loss already incurred by a third party. b) Organization should always try to make this a bilateral provision (i.e. each party agrees to indemnify and hold the other party harmless, unless one of the parties is sole negligence for its actions or omissions. 10) DISPUTE RESOLUTION CLAUSE a) Is a clause inserted in a contract providing for compulsory arbitration in case of dispute as to rights or liabilities under the contract? b) It is a process of dispute resolution in which a neutral third party (arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard. c) Where arbitration is voluntary, the disputing parties select the arbitrator who has the power to render a decision. d) There are two standard types of arbitration i) Binding Arbitrator s decision is final, and judgment rendered can be entered in any Court having jurisdiction. ii) Non-binding Arbitrator s decision can be appealed to the court having jurisdiction. 11) ASSIGNMENT a) Know what each party s rights of assignment are pertaining to the contract. i) If there is a possibility of the event merging or being sold to another entity, make sure to modify the provision pertaining to non-assignment of organization s contractual rights. b) Modify to maintain rights to transfer to a third party in the event of sale of event or merger. 12) NOTICES a) Make sure names and addresses of parties to receive any notices are clearly stated on the contract. b) Know the conditions and procedures for implementing waivers and notices. 13) SEVERABILITY OF CLAUSES 7
This clause provides that all parts of a contract are self-sustaining and capable of separate enforcement despite invalidity of one or more parts of the contract, unless such provisions materially destroy the essence/purpose of the entire agreement. 14) JURISDICTION a) Determine if the contract contains a Jurisdiction Clause stating that causes of action will be brought only in the facility s jurisdiction. b) This clause defines which court the contract assigns to have the power to decide a matter in controversy and presupposes the existence of a duly constituted court with control over the subject matter and the parties. i) Be advised if organization is headquartered in a different state than the facility, once you agree to a waive jurisdiction and agree to the facility s jurisdiction, if you bring a cause of action or have to defend against one it can greatly increase your legal costs. 15) CHOICE OF LAW a) Under this clause, the parties to the contract select the controlling law to be applied in the case of litigation, regardless of the judicial district where the case is heard. 16) ENTIRETY OF AGREEMENT/AMENDMENTS. a) Entity of Agreement clause in a contract, means just that, THIS IS THE ENTIRE BINDING AGREEMENT, and without a signed addendum, these amendments may not be legally binding. i) Any clauses and provisions not clearly defined in final signed contract must be set forth in an addendum to the contract, signed by all parties. b) No matter what you may have agreed upon orally, or even in writing prior to the final contract, those terms will almost always be invalid or unenforceable, unless they have been specifically provided for in final contract or incorporated by reference into it, if there is an entirety of agreement clause. DISCLAIMER: THIS PRESENTATION, THE HANDOUT AND CHECKLIST ARE EXPRESSLY FOR THE SOLE 8
PURPOSE OF PROVIDING BASIC GENERAL INFORMATION IN REGARD TO THE SUBJECT MATTER COVERED. IT IS NOT PRESENTED AS, OR INTENDED, IN ANYWAY WHATSOEVER, TO BE A SUBSTITUTE FOR THE SERVICES OR LEGAL OPINION OF AN ATTORNEY, OR ANY OTHER PROFESSIONAL. IT IS STRICTLY BEING PROVIDED WITH THE UNDERSTANDING THAT MARK ROYSNER, AND ROYSNER & ASSOCIATES ARE NOT BY WAY OF THIS PRESENTATION OR THE PRINTED MATERIAL RENDERING ANY LEGAL ADVICE OR OTHER PROFESSIONAL SERVICE. IF LEGAL ADVICE OR OTHER EXPERT ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. ABOUT THE PRESENTER Mark Roysner, with over thirty-four years of experience in the hospitality and tradeshow industries, is widely regarded as one of the exhibitions and events industry s legal experts. Mark was the 2012 recipient of the International Association of Expositions and Events Educator of the Year Award. Mark, has been providing the legal and strategic business expertise necessary to help guide associations, tradeshow producers and corporations through the myriad of legal and contractual issues confronting the exposition and events industry on a daily basis Mark has authored two well known industry publications and numerous articles for industry publications. His first book published by the International Association for Exhibits and Events in 1998 is titled Convention Center Facilities Contracts: Making Sense of Your Agreement and Current Conventional Wisdom and co-authored the 2012 updated version with Luke Puschnig. His second book, Hotel Contracts: A Road Map to Successful Hotel Negotiations is one of the industry s best selling publications on hotel contract issues and is used by universities throughout as part of their hospitality curriculum. Mark also wrote the contracts section of the 3rd Edition of Art of the Show, an industry textbook, and recently completed writing the contracts section of the IAEE s 4th edition of Art of the Show. Additionally, because of Mark s vast hands on experience, he is continuously sought after to lecture and conduct workshops and seminars on current legal and business topics at industry events throughout the country, as well as provide legal commentary and analysis for various event industry and national business publications. For more information call or write: Mark Roysner, Esq. Law Office of Mark Roysner 22287 Mulholland Highway, Suite 382 Calabasas, California 91302 Tel. 818-224-8095 Fax 818-222-6236 Email roysner@roysnerlaw.com 9