Legal Issues, Contracts and Liability

Chapter 18

Objectives:After completing chapter 18, the reader will be able

to:• Recognize the basic components of a facility

contract.

• Discuss legal issues pertaining to meeting management, such as liability, insurance and confirmation letters.

• Identify legal issues concerning international meetings.

• Coordinate proper music licensing for the sponsoring organization.

Introduction• An understanding of the basic local, state and

federal laws that affect meeting implementation and meeting attendees is an absolute necessity for today’s meeting manager. These laws touch almost every aspect of a meeting, thereby requiring a meeting manager to develop the ability to recognize legal issues and to identify and take appropriate steps to limit or eliminate potential problems.

Overview• Read and Understand

– Often don’t until dispute or client asks you a question about the clause and you don’t know why it is in there.

– Often it is somebody else’s form and the clause that you are using doesn’t even pertain to your business.

– Good time to reflect (talk to your supervisor or legal counsel) and revise or create with mind towards resolving most common disputes likely to arise (can’t cover everything) on your terms.

Review and Revise Periodically• Typos/misspelled words over time (passed down

word processor to word processor). • Example: proposed contract for a meeting I had in

March 1998 the room cut off was for March 1 1997. On September 16, I received a contract that showed the price of coffee at 7:30 am to be a $1.75, but at 10:00 am the same coffee (now old and stale) jumped to $3.50. A phone called cleared the situation up.

Review and Revise Periodically

• Inconsistent terms will be construed against the drafter.

• When your contracts go out sloppy you lose credibility with your client and the court.

Contract Issues:

• LEGAL TIPS YOU ABSOLUTELY MUST UNDERSTAND:

Understand the legal requirements of a contract.

Contract Issues:• Understand the proper way to Amend a

Contract or Proposal– Don’t allow oral modification use a clause which

states that all modifications to the contract must be made in writing.

– Identify a person or persons on your staff and with the contracting party who are allowed to modify the contract on the party’s behalf.

– Make sure that all modifications are signed off to by both parties.

– If an oral modification is made on site make sure the person who is asking for the change is authorized to do so.

Contract Issues:

• Always Define Your Terms– Make sure the other party understands the

terms (i.e. guarantees). It is a good idea to have them sign off on clauses like the guarantee so that they won’t come back later and say I didn’t know about that or I didn’t understand.

Mutual Objectives Of Every Contract:

• Clearly specify prices and rates;• Specify intent and expectations of the

parties regarding performance;• Establish and list deadlines;• Allocate liability between the parties;

– Indemnification clauses

Mutual Objectives Of Every Contract:

• Specify remedies for breach or default on both sides;– Liquidated damages

• Make the contract legally clear, precise and inclusive so as to avoid future disputes.

Key Clauses for Concern In Catering Contracts

• Liquidated damages/cancellation clauses (also slippage and attrition clauses)– What are liquidated damages?– When is this type of clause useful?

Liquidated Damages

• Liquidated damages are stipulated to in advance what amount is going to be paid to you as damages if they breach without going to the trouble of proving up your actual damages in court.

Liquidated Damages / Cancellation Clauses??

• These types of clauses are usually used where actual damages are otherwise difficult to determine with precision (i.e someone cancels a certain period before the event). It is difficult to determine amount lost in preparation and more importantly opportunity costs (foregoing booking other business).

(continued)

Liquidated Damages / Cancellation Clauses??

• If you rely on liquidated damages and the clause is determined to be enforceable you can recover even if you do not suffer any actual damages (i.e. you rebook).

• Is it enforceable?

The court looks at:

• Parties intent must be clearly expressed (reasonable damages not a penalty).

• Amount stipulated can’t be out of proportion to actual damage (or grossly exceed amount of damage reasonably expected to suffer).

The court looks at: (continued)

• Problem—courts look at the clauses with disfavor and if there is any appearance that the amount is unfair or excessive—they will likely call it a penalty and strike down the liquidated damage clause.

The court looks at: (continued)

• Put in clause language that explains what the clause means and what it is for.– Educate clients so they understand.– No question to court as to the intent or

agreement (perhaps have the client sign that they understand the clause).

Cancellation Clauses????

• Case by case• Include a windfall b/c amount includes

cost (which is probably not incurred) and profit.

• Courts don’t like them.• Why have a cancellation clause?

– Deterrent to breach– Bargaining power

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• Indemnification• Oral modification• Acts of god etc…• Guarantees• Changes, additions, and modifications• Liquor liability• Americans with disabilities

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• Ownership• Duty to mitigate damages• Termination• Construction and remodeling• Service fees versus gratuities

Group DiscussionsAttrition and

Cancellation By the Group