John Foster, Esq., began his presentation by reminding attendees that “If you ask for something from the other side before a contract exists, it’s called negotiating. If you ask for something after the contract exists, it’s called begging!” Foster, Senior Partner with law firm Foster, Jensen & Gulley, specializes in the legal aspects of meetings & conventions, trade shows & events, and association management.
Preparation is a better tactic than begging, and Foster identified these important elements of the preparation process:
- Clarify objectives
- Gather information (such as with whom you’ll be dealing and the length of time they’ve been at the facility).
- Obtain a copy of the form agreement and share with your lawyer early.
- Know what’s negotiable
- Negotiate specifics in writing.
He pointed out two important rules: Negotiate at the proper authority level (with someone who has authority to make changes) and remember that “All contract terms are negotiable, but all terms have a price.” Rent is usually not negotiable, he said.
“Licenses and agreements are usually prepared by the facility to protect the facility’s rights, specify terms of performance (rates, dates, space), and establish the user’s responsibility and liability,” Foster explained. “The user’s rights and limits of liability are usually not included – you have to ask.”
He discussed these pitfalls:
1. Letters of Intent
These can be binding. The customer’s obligation to perform should be continent on mutual agreement on the terms of the License and terms of hotel contracts.
2. Reassignment of Space
a. Specify that reassignments can be made only with the customer’s written consent.
b. Make assignment of specific meeting and exhibit space a material term of the agreement.
c. State that the licensee has a right of termination or the “right of specific performance if the convention center defaults on these terms.”
3. Liability, Indemnification, and Insurance Clauses
Each party’s obligations, etc. depend on the agreement that is signed.
There are four types of indemnification clauses:
a. Event sponsor accepts liability only for its own negligence or conduct.
b. The event sponsor accepts liability for own negligence and conduct and for Facility’s negligence and conduct, unless Facility is solely and grossly negligent.
c. Event sponsor accepts liability only for its own negligence and conduct; Facility accepts responsibility only for its negligence and conduct.
d. Event sponsor accepts liability for both its negligence and the Facility’s negligence – even if the Facility is solely or grossly negligent.
Indemnification and Hold Harmless – “You want the Facility to take responsibility for acts and omissions of employees and agents,” Foster said. Further, the Facility should accept responsibility for defects in the equipment, defects in the Facility and acts or omission of its employees and agents. Other damage should be allocated prorata.”
Insurance and Risk Management – Facility agreements should always include an insurance provision. The Facility and event sponsor should agree on limits and the scope of the policy. Foster urged planners to “negotiate for a mutual waiver of subrogation” and to “limit liability for property damage to the amount of insurance stated in the agreement.”
4. “As Is” Condition of Facility
Foster said that the “Facility should warrant that the premises will be in the same or better condition as it is at signing.” The clause addressing the Condition and Inspection of Returned Premises should state that normal wear and tear is acceptable.
5. Condition and Inspection of Returned Premises
The License should also specify that representatives of the Facility, Licensee, and the general contractor should be required to conduct a final inspection of the premises and document any damage that might have occurred during the event. “The Licensee’s responsibility for repair should be limited to that discovered during the final walk-through.”
6. Compliance with Future Operating Rules and Regulations/Changed Conditions
Foster noted that the Event Sponsor should have either the right of termination or the ability to deduct the additional expense “if future rule changes have a substantially negative impact on the operations or financial performance of the event.”
7. Exclusive Services Added After Contract Execution
Foster thinks that the show sponsor should have the right to use any reputable outside service contractor other than for utilities or in-house arrangements.
8. Other Facility Events
He said that “The Facility should be required to provide notice of other events in the building during your event.” For tradeshows, the Facility should limit competitor’s access to the Facility over your event dates. Public shows should have protection for competitor events before and after your event.
9. Cancellation /Default Clauses
The cancellation/default clause should be reciprocal. The Event Sponsor should receive credit for all cancelled space that is resold.
10. Meeting Room Equipment Subject to Availability
Foster noted that the Facility should agree to provide enough chairs and tables to set each meeting to its maximum capacity.
“The bottom line is that Facility Licenses should protect the interests of both Parties,” he said.
Foster cautioned that, “The handouts, visuals, and presentation are provided with the understanding that the presenter and sponsoring organization are not engaged in rendering specific legal advice or professional services through the distribution of the materials or the presentation. If legal or other expert assistance is required, please consult with a professional who is familiar with your specific circumstances.”