5 Contract Clauses to Never Overlook

By: Danielle Jessup

Contracts can be a scary task if you are not familiar with the different clauses and terminology used today. The APEX Contracts Accepted Practices is a great tool to keep on file and reference before signing any contract/agreement. Picture this, you sign a contract for a client’s meeting and didn’t review the function space in its entirety. You get onsite and the meeting room that you thought you had on a 24 hour hold is not available until that evening. So you, your staff and the conference materials now have to wait a full day to move into the “office space”. Something so small can set your meeting off to a bad start. Whether you are working on a large annual conference or a small board meeting contract, here are 5 clauses that you should never overlook.Contract

Image courtesy of Jeroen van Oostrom at FreeDigitalPhotos.net
  1. BILLING ARRANGEMENTS

Contracts should include language that addresses when payment is due, including deposits, penalties for late payment, who is responsible for payment and any, agreed upon discounts.

DON’T FORGET to ensure payment dates and exact amount due is specifically documented. For example, if you setup a master account, make sure the clause specifically states whether payments will be automatically billed or required by advanced deposit.

Example: If you have a master account setup, the contract should include a detailed outline of what items are to be charged. If meeting room rental, food and beverage and audio visual are to be charged to the master, but sleeping rooms are individual responsibility, this should be stated in the signed contract. Also, make sure you receive a countersigned copy of the contract for your files to ensure you have proof the agreement has been executed.

  1. FORCE MAJEURE

A force majeure clause is the contract provision that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties occurs that prevents one or both parties from fulfilling their obligations under the contract.

DON’T FORGET to ensure your contract also includes language for postponement or cancellation.

  1. ATTRITION

This is the difference between the number of contracted rooms and the actual number of rooms utilized. This clause defines the group’s liability for failing to fulfill its minimum commitments. This may be a set number or it may include a formula for determining the damages.

DON’T FORGET that attrition clauses are not mandatory in order to have a binding contract. You may also have a section to review/adjust room block commitment.

Example: A contract may include language similar to the following: “The Hotel will allow without liability, an adjustment to the contracted total guest room block of 50 nights or 15% of the contracted block at the cutoff date of X.”

  1. CANCELLATION

This clause defines what happens if one of the parties cancels the contract for reasons other than those specified in the contract.

DON’T FORGET to establish specific fees/damages that will be due and how the amount was defined.

Example: Cancellation policies might read as follows:

Date of Decision to Cancel Amount of Liquidated Damages Due
Date of agreement to 365 days prior $20,000 which is one nights peek room rental
From 364 days prior to 90 days prior $50,000 which is 50% of total room revenue
From 89 days prior to 0 days prior $100,000 which is 100% of total room revenue
  1. RELOCATION / WALK CLAUSE

This clause defines the consequences to the housing facility in the event they cannot accommodate a guaranteed reservation.

DON’T FORGET this clause should include a statement that ensures relocation will provide a credit to the room block commitment, other concessions as negotiated in the contract, complimentary transportation for each day the guest is denied accommodations, comparable accommodations at no charge or the same price as the contracted room rate, and lastly that the guest will receive first right of refusal to available room at the initial housing facility.

Contracts can be scary but there are two tips to help ensure a confident agreement. First, create a document that includes examples of contract clauses. This will allow you to compare the facilities clauses to those that have been approved and reviewed by you. You can use the APEX as an example. Second, have someone else review the contract that is either familiar with the event or has legal experience.

If you have any feedback to help those preparing to sign a contract, feel free to comment below.

DanielleJessupBio

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