While most of us work with facility contracts on a regular basis, the CMP exam requires applied knowledge of much of the "legalese" contained in these documents. Likewise, while we may have a basic understanding of core insurance coverage, we need to understand all types of insurance related to meetings. Terminology is therefore an important part of this function.

Contracts

According to the CIC Manual, three elements are required in order for a contract to actually be legal:

• an offer (which in this case refers to the basic terms of the contract)
• acceptance (if anything from the original contract is changed, it is actually referred to as a "counter offer")
• legal consideration, which refers to outlining definite benefits to each party PCMA's Professional Meeting Management actually adds a fourth element: a contract must be legally enforceable. In addition, a working knowledge of all of the different contract clauses is necessary, including:
• ADA (Americans With Disabilities Act) - must outline each party?s responsibilities for complying with the law. Applies only to U.S. contracts.
• ADR (Alternative Dispute Resolution) - should outline rights and remedies, where and how (type of forum) disputes will be resolved, what state?s laws will apply, where a claim can be filed (state and city or county), and alternatives to filing a claim in court (arbitration, mediation, private use of retired judges).
• A variety of "protection" clauses, such as:
• fire protection
• cancellation (should be outlined for either party canceling)
• termination (not the same as cancellation)
• relocation/walk policy
• attrition (should be fair: legally, the facility should not make a higher profit if meeting does not meet its numbers or cancels than they would if the meeting came in at full numbers)
• changes to facility or meeting sponsor (remodeling/construction clause)
• changes to ownership/management
• indemnification

Important to these clauses are ways to negotiate to limit liability, while remaining fair and reciprocal to both parties.

Other terms and conditions of facility contracts are more familiar and are intended to protect the interests of both parties. They include: identifying the group and facility; defining all terms and obligations; option status (first or second option); guest room reservations; meeting requirements; exhibits program; miscellaneous terms/concessions; billing procedures; condition of facility; compliance with operational rules and regulations; exclusive services; other facility events.

There are also other types of agreements, and the CMP exam may require you to know not only what they are, but also where they fall in the meeting timeline and who initiates them. These include confirmation letters/letters of agreement, lease agreements/licenses, and changes. You should also know when electronic contracts/signatures are legal (must be able to prove authenticity, integrity, nonrepudiation and confidentiality).

Lastly, there is quite a bit of "legalese" that goes into defining default or breach of contract. The CMP exam will expect you to understand what these terms mean and what needs to be specified in a contract in order for it to be valid in the case of default/breach by either party.

Insurance

The key to understanding various meeting coverages is in the terminology. You will want to know what each of the following types of insurance covers and ways liability can be limited for each type:

• General liability
• Fire liability
• Medical liability
• Independent contractor liability
• Host and liquor liability
• Dram shop laws
• Additional insured
• Valuable papers and records
• On-site office
• Exhibitor Workers compensation
• Travel and accident
• Non-appearance (speakers/entertainers)
• Cancellation

The last topic covered within this lengthy function is the legal issue of music licensing. You should have a working knowledge of Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors, and Publishers (ASCAP), and how licenses work for organizations that play any type of recorded music during their meetings/events.

Liquidated vs. Mitigated Damages: Negotiating to Limit Liability

With the multitude of contract clauses and terms we?ve outlined here, and with the nature of the industry, there are more instances than ever where damages (note: legally a contract cannot use the word ?penalty?) may be incurred. Not only must meeting managers negotiate the best pricing and concessions into contracts, they must know how to negotiate contract terms and clause wording as well.

The first rule of negotiating damage clauses (attrition and cancellation) is that language must be fair, equitable, and reciprocal to both parties. If one party cancels or fails to live up to the contract, there must be restitution paid so that the non-breaching party does not suffer. If a group cancels a facility, damages should be owed to the facility; if the facility cancels the group, damages should be owed to the group.

The second rule of negotiating to limit liability is that wording should only allow the non-breaching party to make the same profit as if the contract were not breached. Therefore, lost profit (vs. lost revenue) should be negotiated into damage clauses. Keep in mind that the hotel determines the profit levels for rooms, food and beverage, meeting/exhibit space rental, and ancillary services. Liquidated damages are simply an agreed-upon amount, as actual damages are quite difficult to determine by either party. Remember that a hotel would enjoy profits from many areas if the meeting is not cancelled or picks up at full/contracted numbers, so liquidated damages may include all profit centers within the hotel. Likewise, the organization can determine its lost profit if the hotel cancels the group, including out-of-pocket costs for changing venue, and loss of attendance/income.

Mitigation occurs when something is done to lessen the damages, i.e., a "resell" clause. As facilities do not physically hold specific rooms for a group, unless the hotel is completely sold out over all dates, there is no way to prove that your rooms were or were not resold. A good way to combat this is to base it on the percentage of rooms (of the total number of rooms in the hotel) that were held for your group and consider your rooms re-sold if anything over that percentage of rooms are re-sold (at your group rate or higher). If rooms are re-sold at lower rates, the hotel has the right to make up the difference in profit. This mitigation formula can be applied to meeting/exhibit space, food and beverage, and ancillary services as well.

When either party breaches or defaults on the contract (i.e., cancels or has significant slippage or attrition from contracted numbers), damages are due. As long as you keep everything fair so as not to harm either party unnecessarily, negotiating damage clauses can be an area in which both parties shine.

Jim Daggett, CAE, CMP, is the founder and president, and Vicky Betzig, CMP, is vice president of JRDaggett & Associates, a management and consulting company for the meetings, conventions, and exhibitions industry. Both have been integrally involved in the CMP process over the past 20 years, and have created PCMA's CMP Study Weekend, PCMA?s CMP Instructor Training, and PCMA?s Online CMP Prep courses. For more information on PCMA's CMP programs, please visit www.pcma.org.

The Certified Meeting Professional (CMP) designation, the foremost certification program of today's meetings, conventions, and expositions industry, recognizes those who have achieved the industry's highest standards of professionalism. Established in 1985 by the Convention Industry Council (CIC), the CMP credential was developed to increase the proficiency of meeting professionals in any component or sector of the industry. For more information on obtaining the CMP designation, please contact the Convention Industry Council at www.conventionindustry.org.