As reported COVID-19 cases rise and event cancellations funnel in, meeting planners worldwide are scrutinizing venue contracts.
But is there more you should be looking for in the Force Majeure clause when initially signing a contract?
First things first, what is “Force Majeure”? According to Cornell Law, Force Majeure is a provision commonly found in contracts that frees both parties from obligation if an extraordinary event prevents one or both parties from performing. The events must be unforeseeable and unavoidable.
Event planners must not only be equipped to combat an epidemic like the Coronavirus (COVID-19), but all circumstances deemed beyond their control. Whether it be a war, natural disaster, terrorist attack, disease, strikes, or an act of state or government action that causes you to cancel an event – you should carefully review the Force Majeure clause before signing a contract to protect your client if cancellations arise.
Here are a few things you can do:
- Ensure the Force Majeure clause is global
Force Majeures are often only applicable if the emergency is in the event city. This is especially important when you have delegates traveling from all over the world to your event. The emergency may affect the areas that your delegates reside in, but not necessarily the event city. Ensure the Force Majeure clause covers global emergencies. - Get your deposit back
Venues will intentionally neglect the mention of giving deposits back. Make sure the hotel or venue contract says something along the lines of “No party will be held liable if cancellation happens under force majeure.” You’ll be held responsible for any out of pocket costs, nonetheless able to spare losing your deposit. - Ask for a rebooking clause
A rebooking clause states what the venue will agree to if the emergency does not fall under the Force Majeure clause. You won’t receive your money back, however, you can apply it as a credit towards a future booking. Hotels and venues often offer a grace period of 12 months for rebooking. - Consider a re-let or resale clause
If hotel rooms are not filling up and you’re facing attrition, a resale clause states the hotel will credit you for any rooms that it is able to resell. To go a step further, ask the hotel for an audit on what rooms were booked to ensure you’re being credited appropriately. - Put together an emergency action plan
Always ensure your Emergency Action Plan, “EAP” is up to date. A solid EAP is a living document that must be current and distributed for each event. Integrate the hotel or venue’s EAP into yours and share it will the management and security team at the hotel or venue.
In conclusion, carefully reviewing venue contracts is the best thing you can do for protection during force majeure events. Renee Jacobs, our EVP – Conferences & Exhibitions, says, “Desperate times don’t call for desperate measures – they call for strategic, calculated measures which start with a well written, all-inclusive venue contract.”
At MGME, our team of meeting professionals are experts at reviewing contracts when sourcing a venue to ensure our clients are always protected.