Take 10! - Contracts: Covering Your Assets, Part 2
Barbara, I have a contract where the hotel offered a rebook but the percentage was not listed and the meeting has been cancelled. How do the hotel and I come to agreement on what the rebook is since it is not listed as an amount or percentage? I asked the hotel for 100 percent rebook since no amount was listed. What legal rights do we have if no percentage was listed? Thanks!
The answer to your question will depend on the language in the contract, but generally, if the language stated that the Group was entitled to rebook another meeting at the hotel in lieu of paying cancellation fees, then I would take the position (as you did) that a 100 percent credit should apply. Ultimately, the hotel will have to decide whether it wants to fight the group on this issue or take the replacement business. If the cancellation fee has not been paid yet, the group could await payment of the fee until a resolution of the replacement meeting takes place. If the hotel is not cooperating, I would also recommend contacting the national sales office for the hotel.
We have a contract with a hotel that closed without contacting any one. It is supposed to be being reopened later this year or early next year under a new brand and possibly with new owners. No one is answering any calls or e-mails. What obligation, if any, does the hotel have in honoring our contract?
The group likely has no obligation to the hotel under this scenario unless the hotel can provide assurances to the group that it can perform the contract as written. The group should request written assurances from the hotel and if it does not receive such assurances, the group can treat the hotel’s lack of response as its inability to perform the contract, which would excuse the group’s performance under the contract as well.
Hoping Barbara will talk about "mutual" indemnification and the importance and difference?
Mutual indemnification is when each party agrees to indemnify the other party for claims arising out of their negligence. In other words, if one party does something wrong or forgets to do something and someone gets hurt and the group gets sued, the group can look to the vendor’s indemnification obligation for protection. In the same way, if the group does something wrong and the vendor gets sued as a result, the group’s indemnification obligation would protect the vendor. Since often the group is a passive consumer in meeting- related contracts and therefore not likely to do something to get the vendor sued, it is usually a good idea to agree to indemnify the vendor in order to get the vendor to indemnify the group.
How does it work when you hire a ground company for individual transfers (i.e., we are an account with them, but no large-scale contract)--should we have a contract in place for any transfer? Or does the ground company have responsibility regardless?
The ground transportation company has liability for its actions regardless of whether there is a contract in place. But without a contract that includes an indemnification provision, the group is not protected against claims brought against it by third parties (people other than the group or the company). The group would need to defend those claims and then seek reimbursement from the company. Therefore, I recommend your group have a standing contract in place with the ground transportation company that includes an indemnification provision so that the group can invoke the clause’s protection right from the start of a claim.
Why do we need cancellation insurance if we have force majeure clauses? What is the difference?
Event cancellation insurance underwrites the total revenue generated by a meeting. Force majeure provisions excuse a party’s performance under the contract (the party does not have to pay a cancellation fee) but it does not provide the revenue that the group would have received had it been able to hold its meeting. Event cancellation insurance covers revenue losses for both total and partial (start late or finish early) cancellations due to a covered event (including force majeure). I recommend groups procure event cancellation insurance for revenue- producing meetings.
We might get to this question about insurance, but my client refuses to add a hotel or supplier as an additional insured because the indemnification clause states they will hold them harmless. So why should they list them as an additional insurer? Do they have a qualified concern?
Insurance is the financial backing behind someone’s promise to indemnify another party. As such, the hotel wants to know that the group has insurance, and also, via the additional insured requirement, become a covered party under the group’s insurance policy for added protection. Typically, if the group is going to name another party as an additional insured under its policy, it should ask the other party to name the group as an additional insured under its policy as well.
Can an alcohol rider be purchased?
Yes, parties can purchase liquor claims coverage under their genera liability policy. Most policies exclude liquor claims, so groups will need to pay more to get an endorsement/rider to cover such claims. I recommend such coverage to protect the group in the event it is brought in to a liquor liability claim.
Can you put a release and waiver in your registration terms and conditions?
Yes, a group can put the release and waiver in its registration materials. The key aspect is to ensure that individuals will sign such statements prior to participating in any conference activity and the organization should maintain a record of such documents.
Do you recommend having releases and waivers for tours?
Yes, having a release and waiver for tours is a good idea. Since people sign up for the tours voluntarily, they are taking responsibility for their own safety. You could have the release and waivers signed at the time someone agrees to participate in the tour. And from an enforcement standpoint, if they don’t sign the release and waiver, they are not able to participate in the tour.
Can you get the city changed in the contract for arbitration? It's always stated that the city is the home of the vendor. Do you ever get it changed to the organization's home city?
Yes, groups can try to get the city and state changed for arbitration. Typically, the city must have a connection to the parties, e.g., city where the group or hotel is located. Ultimately, if the parties cannot agree on a city, they can remove reference to the city altogether and leave the options open for a determination by an arbitrator at a later date.
