Convention center contracts generally and historically have been misunderstood and perceived by customers as instruments that are inflexible, inconsistent, and generally written to cover all facility events. That's not surprising since facility contracts were drafted by and for facility interests.

In 1992, PCMA President William Myers appointed a Task Force comprised of association executives, convention center management, convention bureau executives, and industry attorneys to develop convention center contract guidelines that would improve relationships between facilities and their customers. (On insurance issues, the Task Force received counsel and guidance from an independent insurance consultant familiar with the industry.) The Task Force's charge was to review and analyze convention center contracts and develop a set of consistent concepts to help make contracts fair, balanced, flexible, understandable, and tailored to the industry. The Task Force recognized early on that all facilities have unique environments and that their customers have unique events as well, which precluded the creation of a model facility contract or language. The White Paper does not attempt to draft model contract language but instead provides guidelines of fair and equitable principles by which the customer and facility can conduct business. The Task Force identified the most common contract elements and developed corresponding guidelines for convention center contracts.

It is recommended that these guidelines form the basis for designing facility contracts for the convention and exposition industry. The Task Force also recommends that facilities design contracts specifically for convention and exposition events and that, wherever possible, contract language be user-friendly without sacrificing the legality of the instrument. This latter recommendation has been followed in drafting these guidelines.

Finally, the Task Force recognizes that the issues underlying the guidelines are dynamic and complex, and they represent a starting point in resolving those issues.

1. Indemnification Insurance/Clauses

Arguably, the most controversial and least understood areas in facility contracts are indemnification clauses and the corresponding liability and necessary insurance. After consultation with legal and insurance experts, the Task Force recommends:

Guideline:

• The customer shall furnish at his expense the primary event policy covering all claims of an event, except in cases of sole negligence, willful misconduct, acts or omissions of the facility, its employees, agents, subcontractors, etc. Sole negligence may include faulty equipment provided by the facility and defects in the leased premises.
• The facility entity shall be listed as an additional insured on the primary event policy.
• The facility lease shall spell out the terms and limits of customer's liability for fire and other damage to the facility's property and equipment under the customer's care, custody and control, and such liability shall be limited to the amount of the customer's insurance as required in the lease; or, customer and facility may agree to mutual waivers of subrogation with respect to fire and property damage.
• Indemnification clauses shall be clearly defined in the contract and may be subject to prevailing laws.

2. Condition of Facility Clauses

The Task Force formulated this guideline to protect the customer's best interest when a facility is not maintained between the signing of the contract and the start of the event.

Guideline:

The facility will provide the premises in a condition similar to or better than when the contract was executed or at the last inspection prior to signing the contract. Should the facility deteriorate to an unacceptable level, the customer will be entitled to address the deficiencies through the default provisions of the contract. The burden of proof rests with the customer.

3. Condition and Inspection of Returned Premises Clauses

In the area of event-related damage, the following clarifies the role of both parties in damage assessment and responsibilities for payment to repair.

Guideline:

The customer, its service contractor, and the facility should conduct a joint inspection of the facility prior to move-in to stipulate existing damage. At the conclusion of an event, the customer and/or its service contractor and the facility should jointly inspect the facility and ascertain damage, if any, to the facility resulting from the activities of the customer. The facility shall notify the customer within a reasonable time the extent of damage and the reasonable cost to repair.

4. Compliance with Future Operating Rules and Regulations/Changed Conditions Clauses

Recognizing that changes may occur after contracts are signed, this addresses any negative impact created by those conditions such as changes in operating rules and regulations of the facility.

Guideline:

• Facilities retain the right to make changes in their operating rules and regulations for the safe and orderly operation of the facility. This right would not apply if the change causes a substantial negative impact on the customer's event. The burden of proof rests with the customer, and remedies prescribed with the Dispute Resolution Clauses/Default/Breach of Contract Clause shall apply.
•  If the customer or the facility creates any changed condition which materially affects operations or financial performance of the event or facility, including changes required by act of local ordinance, law or regulatory code, notice shall be promptly furnished to the parties describing the nature of conditions and suggested remedy.
• Parties shall seek remedy through mutual negotiation or resort to remedies under the Dispute Resolution Clauses/Default/Breach of Contract provision.

5. Exclusive Services Added After Contract Execution This addresses the rights of customers when exclusive services are added after a contract is signed. This guideline is not intended to address a broader issue of the right to exclusivity.

Guideline:

Existing facility exclusive services shall be clearly specified in facility contracts. Where a facility adds a new service after a contract is signed, the facility shall provide the reasonable notice of the service and an opportunity to accept or reject the new exclusive service.

6. Other Facility Events The following addresses multiple or competitive events and the potential negative impact they create.

Guideline:

The facility shall provide complete disclosure of other events scheduled in the facility over the same or overlapping dates of the customer's event at the time of contract negotiations and thereafter upon request of the customer. Both the customer and the facility shall endeavor to avoid creation of events which may be a conflict of interest and impact either party. However, should this occur, the parties should negotiate appropriate remedies found in the Dispute Resolution Clauses/Default/Breach of Contract provision.

7. Contract Interpretation Clauses

The Task Force determined that clauses specifying one party as the sole interpreter of the lease were unfair.

Guideline:

Neither the customer nor the facility has sole power as interpreter of the lease terms.

8. Notice of Default Clauses

The Task Force determined contract breaches and litigation could be prevented by providing both parties reasonable time to solve contract defaults.

Guideline:

The customer and the facility shall mutually agree to provide reasonable notice and time to cure or remedy a contract default with the exception of situations involving personal safety, immediate waste, and damage to the facilities.

9. Cancellation Clauses

Standard contract forms should not contain stipulated damages. However, payment of damages as a result of cancellations is endorsed. It is recommended that those damages can best be determined through individual contract negotiations or options specified under Guideline 11.

Guideline:

Should either party cancel for reasons other than force majeure, the injured party shall be entitled to recover damages.

10. Reimbursement Cost to Enforce Lease Clause

It is important to include this provision in all contracts.

Guideline:

In any dispute arising between the customer and the facility relating to the lease, the prevailing party shall be entitled to recover a reasonable attorney's fee and all related costs to the litigation.

11. Dispute Resolution Clauses/Default/Breach of Contract

It is in the best interest of both parties to negotiate a comprehensive agreement that includes provisions for dispute resolution.

Guideline:

In the event of a contract dispute, the following procedures and sequence should be undertaken to remedy it:

• Negotiation;
• CLC/Alternative Dispute Resolution;
• and Litigation.

Both the customer and the facility shall be entitled to reimbursement of all reasonable expenses and lost profits substantiated by the customer or the facility if cancellation is made or threatened by the customer or the facility in the performance of any of the obligations contained in the contract.

This white paper was published in the 1993 October issue of Convene.

PCMA Task Force on Convention Center Contracts

Chairman: Daniel E. Weber
Executive Director
Institute of Food Technologists

Secretary: Donald Engler
Director of Marketing
New Orleans Convention Center

Committee Members:

Carroll Armstrong
Marketing Director
San Diego Convention Center Corporation

Richard Cain
Insurance Broker
The Cain Insurance Agencies

Darline Daley
Director of Meetings
American Water Works Association

Richard Dobson, Jr.
Sr. Vice President Conventions & Exhibitions
National Association of Broadcasters

John S. Foster, CHSE, Esq.
Attorney at Law
Law Office of John S. Foster

William Jenkinson
Director, Meetings & Exhibits
American Academy of Ophthalmology

William Langley
General Manager
Kansas City Convention Center

Turner Madden
General Counsel
Washington Convention Center

Michael McQuade
Director of Client Services
Washington State Convention & Trade Center

Dale C. Mers
National Sales Manager Marriott Corporation

Felix Niespodziewanski
Manager, Convention & Meetings Division
American College of Surgeons

Gerald Roper
President
Chicago Convention & Visitors Bureau

John K. Smith
General Manager
Georgia World Congress Center

William Snyder
Past President
Anaheim Area Visitor & Convention Bureau

Lois Stratemeier
Director, Convention & Meeting Services
American Academy of Orthopaedic Surgeons

James Sweeney
Assistant Executive Director
American Dental Association