Contract Negotiation: Consult the Experts

A2E President, Mark Khan, joined a group of event industry experts to discuss the anatomy of event budgets and contract negotiation in the webinar, The Myths, and Realities of Event Budgets Post COVID. All panelists agreed: understanding the fine print is more important than ever when it comes to negotiating contracts in a post-COVID economy.

We get it—it can be tempting to hurry through the contract negotiation process and finalize your deal. But when it comes to contracts, patience is a virtue. Hastening the contract process will increase your chance of overlooking important and technical language that is often hard to understand but can bind you to unfavorable legal obligations. The overarching point? As founder and chairman of BizBash, David Adler, puts it, “Read the damn contract because everything is up for grabs.”

It’s easy to forget that a contract is negotiable, and you have the right as the client to change it. This is important to keep in mind because, once you’ve signed the contract, your leverage will decrease significantly. Contract negotiation is all about reaching an agreement that works well for both the client and the business; and neglecting to devote the right amount of attention can end in broken contracts, bad business relationships, and worst-case scenario, lawsuits.

When it comes to understanding the nitty gritty details, Mark suggests having someone on your team who can understand the ‘legalese’ of the documents: “I like to have people who are much smarter than me read the contracts as well to see what clauses jump out.” Employing a lawyer to read the contract can be a lifesaver when it comes to ambiguous clauses that may be hidden underneath a plethora of confusing legal jargon.

Bob Russo, of Bob Russo Event Design & Consult, elaborates on the three most important clauses to look out for—cancellation, attrition, and force majeure.

Cancellation

Cancellations proved to be the silent killer of the COVID era and are still extremely critical when it comes to event planning today. Cancellation clauses are found in every event insurance policy and contract. They allow the insurer to cancel the policy, before a certain date, if the policyholder does not comply with an agreed-upon condition. The cancelation clause is your exit from a bad deal, make sure the language favors your event requirements.

Attrition

The attrition clause articulates your financial responsibility to populate an event. For event planners, attrition should be the first clause on your legal checklist. The attrition rate you negotiate could make or break your budget in the case of last-minute no-shows or event mishaps. It’s particularly important when contracting a hotel space, as negotiating a lower attrition percentage can save you when the unexpected happens, and ultimately avoid suffering substantial financial losses for you or your client. Because of our experience with covid, it’s still incredibly common to see event attendees taking the virtual route for either safety or convenience reasons. By keeping a close eye on your contract's attrition clause, you can moderate liability in the event that attendees end up opting for a virtual experience rather than an in-person one.

Force Majeure

Force majeure clauses ensure that you can be free from responsibility for unforeseen problems. Typical Force Majeure events include natural causes (fire, storms, floods), governmental or societal events (war, pandemic shut-downs, labor strikes), or other infrastructure failures.

In a post-covid world, this clause is especially important as it takes into account the new complications that come with potential covid outbreaks. If Covid taught us anything, it’s to expect the unexpected. It's wise to make sure your Force majeure clause gives you broad latitude to avoid liability for unfortunate occurrences that are out of your control.

Don’t let your event turn into a legal headache by not doing the due diligence to protect yourself! Hiring a lawyer to review a basic contract may seem like an unnecessary expense, but it could save you a lot of money in the long run and give you the peace of mind to focus on executing a successful event.