Well, hurricane season is upon us and as the Labor Day crowds run for shelter, the thoughts of meetings, weather and other abnormalities came to mind. What does this have to do with meeting contracts? Plenty!
Flash back to fall 2005, shortly after Hurricane Katrina. At my birthday party, a co-worker asked me if I thought that the annual meeting for 3,000 corporate real estate execs we had planned for the fall of 2006 in New Orleans would take place. My immediate response was “no way.” “It’s not until next October … there is no way they’ll let you invoke force majeure,” was his reply. “We’ll see,” was mine.
We were out of the contract a week later.
Most, if not all contracts, should contain a clause that clearly states under what conditions both sides can walk away, shake hands and move on. It may be called an “impossibility clause,” or “Rights to Cancellation” or “Acts of God.” No matter what it is called, in the event that you are caught in a situation where you may need to pull out the agreement and use the clause, you’ll need to be prepared on the front end of the contracting process to make sure that the clause you accept and sign will protect you as a planner.
Most hotel force majeure clauses are “the standard.” You know, “legal stuff … don’t worry about it … everyone signs it.” WRONG! Standard hotel contracts are written by hotel lawyers to protect hotel owners — not planners or clients. If you accept a loosely worded contract, lawyers will wind up in court defending why your position is worth a favorable decision (at a very hefty price).
The key to a well-written force majeure clause is to make sure that it covers all situations that may or could affect the attendance at your event. Until 2001, the term “terrorism” was not something mentioned in hotel agreements. Get the point?
There are areas that you need to include in your force majeure clause that are not technically acts of God, but can have enough of an impact. Case in point – SARS. When the World Health Organization encouraged all travelers not to travel to Toronto, this had a huge impact on meetings … but was it an Act of God? To the city of Toronto, it was not. But to groups booked into the city, it was enough of a concern that they invoked force majeure and fought for favorable releases from contracts. Some did well, some did not. One group I worked with had a good and bad outcome. They were able to reschedule for a later date without penalty, but fell short of their sponsorship and attendance goals due to the situation. They also were sued by one hotel that was not rebooked, due to the decrease in anticipated attendance. If the possibility of a global pandemic had been addressed in the force majeure clause, the group would have been protected.
A caveat: This clause is one that I hope never has to be used by either party. It’s an insurance option in case of a terrible incident. But like all insurance, you have to read and understand your coverage … and what is excluded. Look for changes in these clauses as the world changes. Expect to see “pending or inacted legislation” (consider Arizona’s immigration law) referenced and possibly inserted.
As with all contracts, be complete, be mindful and be careful. It CAN happen to you, so be prepared.
All the best!