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Contracts: The Basics
Presented by
Joshua L. Grimes, ESQ.Attorney at Law
Grimes Law Offices, LLC.
Moderated by
Tyler DavidsonChief Content Director
Meetings Focus
Wednesday, October 8, 2014
Today’s Webinar is worth the following credit toward the CMP
application through the CIC: Strategic Planning, 1 hour. To receive this
credit for attending simply visit:
www.meetingsfocus.com/WebinarClubContracts
Here you may also find a copy of today’s presentation and watch the
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today’s presentation.
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presentation. Should you experience any technical difficulties, please
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Housekeeping
Thank you to our Webinar Sponsors:
Today’s Speaker:
Joshua L. Grimes, ESQ.Attorney at Law
Grimes Law Offices, LLC.
Learning Objectives
• Identify the most-common pitfalls to avoid in the contract phase
• Know what is on, and what may be off, the table when negotiating
contract clauses
• Identify crucial clauses you may want to include in your contracts, to
protect yourself and the organizations you plan for
• Learn about some of the more-recent contract issues that have come
to the fore in the last couple of years
CONTRACTS:
THE BASICS
JOSHUA L. GRIMES, ESQ.
Grimes Law Offices, LLC
Copyright 2014 Grimes Law Offices, LLC
©2014 Joshua L. Grimes, Esq.
This presentation is for informational purposes only and does not constitute legal advice. The sample contract clauses are for illustrative and educational purposes only. Those seeking legal assistance are directed to seek advice from a competent attorney of their choosing.
Negotiating Strategies
• Remember that “Everything is Negotiable”.
• Set Negotiating Priorities –
– What Terms Must You Get?
– What Provisions Are Desirable, But Not
Mandatory?
• Keep Bargaining Power Until Contract Signed.
• Consider Future Contingencies.
Copyright 2014 Grimes Law Offices, LLC
Contracting Rules
• Understand Everything in Contract.
• Put Entire Agreement into Writing.
Copyright 2014 Grimes Law Offices, LLC
Room Rates
• “A La Carte” Pricing.
• Specify What’s Included.
• No Additional Fees Provision.
• Negotiating the Best Rates.
• Pricing Compared to Internet Discounters.
Copyright 2014 Grimes Law Offices, LLC
Sample Extra Charges Provision
The room rate(s) and other charges and fees specified inthis Agreement (plus applicable taxes) shall be the onlymandatory fees or charges assessed by the Hotel in orderfor the Group’s guests to check into a guest room. Unlessotherwise agreed by the Group in advance (in thisAgreement or elsewhere), the Hotel may not require that aguest pay a mandatory “resort fee”, telephone surcharge, orany other additional amount in order to obtain a room(though such charges may be imposed with the agreementof Group (in its sole discretion) at reasonable rates forservices actually rendered).
Copyright 2014 Grimes Law Offices, LLC
Attrition / Performance Damage
Clauses• Traditional Attrition & Cancellation:
– Room Block Commitment.
– Permitted Slippage.
– Customer Paid Lost Profits as Liquidated Damages
on Each Empty Room.
• New Variation:
– Hotel Places Agreed-Upon Minimum For Rooms and
F&B Spending.
– If Minimum Not Achieved, Group Makes Up
Difference.Copyright 2014 Grimes Law Offices, LLC
Attrition: Things to Consider
• How Many Rooms in Rooms Commitment? What if
Number Adjusted?
• Deduct “Free” Rooms from Block.
• Keep Concessions if Paying Attrition Damages.
Copyright 2014 Grimes Law Offices, LLC
More Things to Consider
• If Using “New” Approach, Agreeing on $ Value of
Rooms Commitment.
• Is There Be a Duty for the Venue to Rebook & Credit
Group?
• Need to Audit & Verify That All Group Members
Counted in the Block.
• Remember: Verify Charges for Accuracy!
Copyright 2014 Grimes Law Offices, LLC
New Hotel Performance Damages
Clause – Revised“The Total Sleeping Room Nights Reserved on page 1 of
this Agreement will generate $53,523.36 revenue for Hotel
(“Anticipated Room Revenue”). In the event that Group
does not use all of the sleeping rooms in its Room Block,
you agree that the Hotel will suffer damages. Therefore,
the parties agree that if the contracted event is held as
scheduled, Hotel will not seek damages for Group’s failure
to use and pay for the Total Sleeping Room Nights
Reserved if Group achieves a minimum of 80% of the
Anticipated Room Revenue ($42,818.69).
Copyright 2014 Grimes Law Offices, LLC
New Hotel Performance Damages
Clause (2)Should Group fall below this amount, Group agrees topay to Hotel as reasonable liquidated damages and nota penalty, 70% of the difference between 80% of theAnticipated Room Revenue and the actualized guestroom revenue received by Hotel for rooms used and paidfor as part of the official Room Block, plus any applicabletaxes as a reasonable estimate of the Hotel’s losses onsleeping rooms.”
Copyright 2014 Grimes Law Offices, LLC
Resale Clause
“Hotel shall make reasonable efforts to resell unusedguest rooms in the Group’s room block and rebook thecancelled food and beverage events. Any damages duepursuant to the Performance or Cancellation clauses willbe reduced by the revenue received from unused Groupguest rooms (as calculated in this section) and food andbeverage events that are resold by Hotel. The partiesagree that “resold” rooms will be calculated as follows:The resale revenue credited to attrition or cancellationdamages for each room will be equal to the Group’ssingle room rate for each day that guest rooms areresold.
Copyright 2014 Grimes Law Offices, LLC
Resale Clause (2)
Unused Group rooms will be the last guest rooms resold,
thus guest rooms will be considered resold to the extent
that Hotel is able to sell more guest rooms than it could
have sold if the Group had fully occupied its reserved
block. For example, if the Group does not use thirty (30)
rooms in its block but only ten (10) rooms remain unsold
in Hotel, the attrition or cancellation damages owed will
be reduced by the average daily rate times twenty (20).”
Copyright 2014 Grimes Law Offices, LLC
Force Majeure /
Excuse of Performance Cancellation
• Force Majeure Traditionally Covered Only Limited
Situations Where Meeting “Impossible or Illegal” to
Perform.
• Occurrence Was Outside Parties’ Contemplation At Time
of Contract.
• Now Typically Include Much More – Cancellation For
“Impracticability” As Well.
Copyright 2014 Grimes Law Offices, LLC
• 2 Different Perspectives:
– Suppliers: Can I Perform? Is My Facility Standing?
– Planners: Will My Attendees Show Up?
Copyright 2014 Grimes Law Offices, LLC
Force Majeure /
Excuse of Performance Cancellation
• Cancellation For “Labor Disputes.”
• Bad Weather.
• Disease.
• Terrorism / Acts of War / Civil Unrest.
• Does the Group Have Particular Sensitivities?
– Economic Sensitivities.
– “Moral” Convictions.
Copyright 2014 Grimes Law Offices, LLC
Force Majeure /
Excuse of Performance Cancellation
Sample Force Majeure / Excuse of
Performance Provision“Should events beyond the reasonable control of eitherHotel or Group occur, including, but not limited to acts ofGod, war, strikes/labor disputes/labor unrest (except thoseinvolving Hotel employees, contractors or agents),governmental regulation, civil disturbance, terrorism,disaster, fire, earthquakes, hurricanes, unreasonableextreme inclement weather, curtailment of transportationfacilities, public utility failure, declaration of a “Severe” riskof terrorist attack by the U.S. Department of HomelandSecurity,
Copyright 2014 Grimes Law Offices, LLC
issuance of a travel advisory for the region in whichHotel is located by the World Health Organization, or anyother comparable condition, making it inadvisable, illegalor impossible for either Hotel or Group to perform theirobligations hereunder, the affected party may cancel thisAgreement without liability for any one or more or suchreasons upon written notice to the other. In addition, alldeposits and pre-payments made by Group or its guestsshall be promptly refunded.”
Copyright 2014 Grimes Law Offices, LLC
Sample Force Majeure / Excuse of
Performance Provision (2)
A party seeking to cancel because performance has
become “inadvisable” must provide reasonable evidence
that events outside its control and reasonable
anticipation caused at least 30% of expected attendees
(based on meeting history) not to register for the Event,
or registered attendees to cancel their registrations.
Copyright 2014 Grimes Law Offices, LLC
Sample Force Majeure / Excuse of
Performance Provision (3)
Commissions
• The Issue: When Are They Payable? When Should They
Be Withheld?
• Commissions Earned When Rooms Filled; Payable
When Customer Pays.
• Check Contact Language Carefully: Should Payment be
Withheld Until Paid in Full?
Copyright 2014 Grimes Law Offices, LLC
Hotel Quality Standards
• Issue Related to Meetings Booked Years Out.
• Will Hotel Remain the Same Quality For Years After
Contracting?
• Is A Quality Standard Part of “the Deal?” Maybe …
• What About Hotel Sale / Rebranding?
• Possible Breach of Contract For Failing to Maintain
Quality or Re-Branding.
Copyright 2014 Grimes Law Offices, LLC
• Include Contract Provision Making Hotel Quality & Brand
Material to Deal.
• Setting “Objective” Standards is a Challenge.
• Tie to Mobil / AAA Ratings At Time of Contracting.
• Use Hotel Photos / Take Pictures.
Copyright 2014 Grimes Law Offices, LLC
Hotel Quality Standards
Hotel Quality Standards (2)
• Add Staffing Requirements if Appropriate.
• All Facilities to Be Open & Available.
• Keep Vigilant on Hotel Upkeep, Renovations, Guest
Comments.
Copyright 2014 Grimes Law Offices, LLC
Alcohol Liability
• Alcohol Consumption Major Issue.
• Party Serving / Furnishing Alcohol Should Bear
Responsibility For Injury/Damages.
• Include Contract Provision Absolutely Prohibiting Service
to Those Legally Unable to Drink.
• Require Servers to be Licensed if Required.
• Indemnification.
Copyright 2014 Grimes Law Offices, LLC
Cyber Security
• Issue: Valuable Data on CDs, DVDs, Wireless Networks
Vulnerable to Theft and Hackers.
• Ask About Previous Incidents at Facility.
• Ask A/V Provider to Protect Wireless Data – Put
Specifics in Writing.
• Negotiate For Appropriate Indemnification.
Copyright 2014 Grimes Law Offices, LLC
Cyber Security (2)
• Contract Provision Requiring Updated Security Software – Antivirus, Anti-Malware.
• Instruct Attendees on Protecting CDs, Laptops; Consider Extra Security.
Copyright 2014 Grimes Law Offices, LLC
Questions & Answers
JOSHUA L. GRIMES, ESQUIRE
(215) 772-5070
E-Mail: [email protected]
Web: www.GrimesLaw.org
Joshua Grimes JoshuaGrimes
Grimes Law Offices
Copyright 2014 Grimes Law Offices, LLC
Joshua L. Grimes, ESQ
Attorney at Law
Grimes Law Offices, LLC. [email protected]
Tyler Davidson
Chief Content Director
Meetings [email protected]
Questions?
Our TAKE 10 feature, offered either on our website or via our Webinar Wrap e-
newsletters, provides answers to some of the key questions we just did not have
time to get to during today’s webinar. Look for an email coming soon!
Upcoming Events
• On-Location Broadcast from IMEX America in Las Vegas – Building
BRIC and MIST Programs
Thursday, October 17 at 1pm Eastern
• Contracts: Advanced – presented by Joshua Grimes
Wednesday, October 22nd at 1:00pm Eastern
• Improving Incentive Trips with Mobile Apps - presented by Kevin Long
Wednesday, October 29th at 1pm Eastern
On Demand - Also available for you to view at any time.
Visit (www.meetingsfocus.com/webinars) today learn more, register and Watch
Now!
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program
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Contracts: The Basics
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