READY,SET,CONTRACTS!

Professor Christopher TrudeauAssociate ProfessorThomas M. Cooley Law Schooltrudeauc@cooley.edu@proftrudeau

“No one sues if there is no problem.” Said by some guy named Trudeau

at the MFEA 2013 conference

“I am prepared for the worst, but I

hope for the best.” Benjamin Disraeli – British Prime Minister in the 1800s

Types of InsuranceDirectors’ & Officers’ Insurance

This covers D&O’s of your organization but ONLY for fraud or financial mismanagement.

General Liability Insurance (aka CGL Ins.)

This is the type of policy that covers for personal injuries that happen in your organization.

Might NOT cover events!

Special Event Liability Insurance These policies are designed for your events.

“Contracts are inherently

pessimistic but are a

necessary evil.” Also said by some guy named Trudeau at the MFEA 2013 conference

Necessary Contracts

Site Contracts

Entertainment Contracts

Vendors Contracts (incl. Merchants)

Sponsor Contracts

Releases (aka Waivers)

What to include in every contract? (except releases)

Hours of EventContact Person Payment TermsArrival TimeDate(s) of EventEffect of Non-Performance

Site Contracts Do site contracts first!

Because site may have connections that you need.

Site might have equipment or facilities to use.

Ex. Restrooms, generators, machinery.

What else to include in site contracts?Site Description

Buildings, Facilities, Equip. Included Utilities (who paying and what paid) Contact person for site and for event

Important Dates & TimesPayment TermsEffect of Non-performance

Weather issues & other acts of god? Gov’t shutdown & muni issues?

Cross Promotion with Other Events

Entertainment Contracts

What to include in entertainment contracts? (besides the normal things) Description of Performance

Length, type, & number of performances Important Dates & Times What Event is Providing

Stage size, sound, electricity Copyright Use Performer Allows

Can event use images, videos, sound to promote? Can event use these after event? What about images and recordings of performance?

More things . . .

Promotional Appearances by Performer Performer Pays BMI, ASCAP, SESAC fees Insurance & Liability (performer to provide

own) Be sure to include Indemnification provision

Effect of Non-Performance What happens if the event is cancelled? What if performer cancels? What if the performer does a bad job?

Is there a right to correct for a bad performance?

Licensing Rights Wholesalers

www.bmi.com

www.sesac.com

www.ascap.com

Licensing Rights

WHY PAY? ALL MUSIC IS COPYRIGHTED!!

Payment covers:Music ScoresComposition Songwriting

Does not cover/include:Dramatic Rights OperaBallet Scores Right to Record

When do you have to pay?

If bands are playing cover songs But the band will usually pay if covering DJ’s usually pay the fees if hired for event.

Playing music to a crowd Very broad standard

When don’t you have to pay?

If a band is playing original music

Music used in worship service

Music used as part of education

Music played in food or drink establishment within certain guidelines

If you aren’t going to pay the fee, seek legal help. (It’s probably cheaper to pay the fees.)

Vendor Contracts

“Vendor” is very broad: Food & Beverage Rides, Games, & Attractions Equipment Rentals Service Providers Merchants, Artists, & Artisans

Many of these may have licensing or copyright issues

What to include in vendor agreements? (in vendor applications)

View the application as a contract If vendor gets a slot, they are bound by these terms. Helps eliminate administrative tasks later on.

Applications/contracts should include:

• Booth Size• Payment terms• Workers• Utilities• Products• Price of goods

• Effect of Non-performance

• Contact Person• Release of Liability• Insurance &

Indemnity

SponsorshipUse strategically

create working capital for event build event & brand awareness

Be aware of the message a sponsorship sends about your event

You don’t want Maxim Mag. sponsoring a children’s event.

Sponsorships can be money or in-kind donations

Sponsorship AgreementsAlways Include (besides the standard things): What the sponsorship includes

Amount of money/goods for what publicity? When & how sponsor will be promoted? Free perks for sponsors? (ex. free entry, t-shirts)

Sponsor Artwork – Who creating? When due? Where to deliver? Included a right to refuse sponsorship based on

artwork or goods Have a person in charge of sponsorship.

Cash value (estimate) of in-kind sponsorship

Payment terms or in-kind delivery terms Cancellation of Event &

Insurance/Indemnity

Sponsorship Planning

Make sponsors part of initial plan Give companies time to plan for you in

budget

Create a fact sheet for each sponsorship level

Communicate regularly (weekly or monthly)

Identify fair market value of each item given or received

Sponsorship Tax Considerations

501(c)(3) sponsorships may be deductible if: receive token gift for sponsorship sponsorship is more than fair market value of

gift received

Not deductible if sponsor receives same amount in gift value as amount of sponsorship.

Charitable Organizations

501(c)(3) Orgs: 501(c)(3) must be organized EXCLUSIVELY for exempt purposes:

Charitable, Literary, Scientific, Educational, or Religious

Ex. An org. that puts on amateur sporting events

Other types of non-profit status: 501(c)(4): civic leagues & social welfare orgs. 501(c)(6): chambers of commerce, business leagues,

real estate boards 501(c)(7): social and recreational clubs

Charitable Organizations

Steps to become a Charitable Organization

1. Meet the IRS’s criteria for 501(c)(3)

2. Michigan - File Articles of Incorporation

3. IRS – File for Employer Identification Number

4. Conduct First Corporate Activities

5. IRS – Apply for 501(c)(3) status

6. MI – Register with Attorney General’s office

501(c)(3) & soliciting donations:

Must File: Initial Solicitation Registration Form Corporation & Financial Documentation Annual Renewal

For more on the Charitable Organization & Solicitations Act:

www.michigan.gov/agcharitites

More Compliance Help

www.mnaonline.org

www.stayinglegalmi.org

Event Releases

Purposes Release event from liability Provides understanding of risks

assumed Indemnification (if you pay, they reimburse)

Consent to medical treatment Release of publicity rights

Event ReleasesTwo groups who need to sign releases① Event volunteers

② Participants in event activities

If liability releases are NOT in other contracts, have the following sign separate releases:

Sponsors Site Owners or Site Reps Event Org. Officers & Employees Vendors Entertainers

Keys to drafting event releases

Use clear language that releases event from liability.

In Michigan, you cannot waive liability for intentional acts or grossly negligent acts.

Include language that says person “understands they are releasing their right to sue for negligence.”

Make sure they are waiving rights for themselves and their family.

Continued… Also include that person assumes the

risks by doing the activity.

Include a consent to medical treatment.

Include indemnification

Include parent/guardian signature line and requiring parent to approve.

Release of publicity rights (in same agreement)? 2nd signature line for publicity release?

What is assumption of the risk?

That the person understands the risks involved in the activity AND agrees to take responsibility if they get hurt.

Trudeau Tip: If possible, create releases specifically for each event. Include general, encompassing language

first Then include a FEW specific ways a person

can be injured by doing that event (Do not list every way!)

Example: Assumption of Risk

By signing this release, I agree to assume all risks inherently involved with playing softball including, but not limited to:

Being hit with objects while participating in the event;

Running into other participants; or Injuring myself through the physical

activity inherent in the event.

Note: Using general language helps to be more inclusive.

Example: General WaiverRelease of Liability

By signing this agreement, I acknowledge that I am voluntarily participating in this activity. I further acknowledge that I understand the inherent risks involved in this activity, and I assume full responsibility for any injuries that result from these inherent risks.

For allowing me to participate in this activity, I expressly release ________________ and its agents from liability resulting from ordinary negligence. I understand that this means that I am waiving my right to sue _______________ and its agents for ordinary negligence.

I also understand that this waiver prohibits my family, my heirs, and my assigns from suing _____________or its agents. Caution: This is not legal advice for your situation. This may not work for you. It is a general waiver. Remember, Trudeau likes specific waivers!

How many of you create your own

contracts?

If you create your own event contracts, your duty is to

Protect your event!

A lawyer’s first duty is to protect a client’s interest. Your org is your client.

Three keys to clear legal writing

① The writing level must match the audience’s reading level.

② You should anticipate the arguments of a “reader in bad faith.”

Ask yourself: “If someone were to try and get around this document, how would they do it?”

③ Eliminate ambiguity! But appreciate vagueness because precision may not be possible (or desirable).

Use pronouns to “speak” tothe reader“You" and “I” and other pronouns

speak directly to readers.These familiar words increase

readability. Pronouns eliminate lots of words.

How to use pronouns:Use “we” to refer to your

organization.To refer to the reader, use “you” in

the text. Use “I” if a first-person document

like a release.

Use HeadingsMust be accurate & informativeAvoid overly abstract labels

Not: Coverage But: Property We Insure

or What property is insured?

Eliminate the “S” wordsShallSaidSuch Same

The worst “S” word: “Shall”“Shall” can have several meanings, and using it can create problems.

Use “must” for an obligation Use “must not” for a prohibition Use “may” for a discretionary action Use “should” for a recommendation Use “will” for a promise to do something Use “is” for a fact, policy, or legal rule

Ex. This agreement is governed by Michigan law.

Avoid the passive voiceDanger: passive sentences sometimes fail to impose a duty.

A dog must be kept on a leash. Who must keep the dog on the leash?

Event attendees?Event organizers? Vendors?

Entertainers?Prefer the active voice by putting the

actor in the sentence.

Pay attention to punctuation

Vagueness v. Ambiguity

Fact: Most people don’t know the difference – including lawyers.

Vagueness is using flexible language

Ambiguity is creating a dual meaning.

Ambiguity

Presents more than one possible meaning to the reader.

Always an error. Eliminating ambiguity is the key to

clear drafting!

Example: I will be doing rounds on Saturday and taking appointments if I have time.

What to watch for?

Multi-meaning words The board sanctioned the conduct. [Does

sanction mean approve or disapprove?]

Avoid“elegant variation.” Be ruthlessly consistent in the terms you use. Ex. Cancelled v. terminated v. stopped

Why? Because courts will presume you switched for a reason.

What to watch for?

① Be careful with modifiers used in a sentence.

② Be careful of “and” & “or.”

Example I use with my students: I will grade your briefs and record the scores

carefully.Will I only record their scores carefully?

Avoid Misplaced ModifiersTo avoid ambiguity, a modifier must be as close as possible to the word it modifies.

My client has discussed your proposal to fill the drainage ditch with his partners. (Did you just propose to use your partners as fill?)

Our neighbor was a lovely woman who wore sweatpants named Inger. (Do you name your sweatpants?)

Watch out for ages & dates

Careless phrasing can lead to serious inadvertent ambiguity.

Ambiguous: Open to anyone between the ages of 21

and 30.Ambiguous:

The option expires on May 8, 2013.

Tips for creating lists:

Start with a general, encompassing term first.

Then list a few key things you want the reader to be aware of.

Use (1) “such as” or (2) “includes, but is not limited to” to lead into these specifics.

Only the tip of the iceberg, but remember these three things:

① The writing level must match the audience’s reading level.

② Drafters must anticipate the arguments of a “reader in bad faith.”

Ask yourself: “If someone were to try and get around this document, how would they do it?”

③ Eliminate ambiguity! But appreciate vagueness because precision may not be possible (or desirable).

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