Do your event-planning contracts contain a force majeure clause? Are you familiar with what the clause covers and how it protects your business? Is it enough to cover you for anything that can go wrong with your event in case you need to cancel?
We want to help you wrap your head around the force majeure clause and give you some useful contract-creation pointers. While we’re not lawyers offering legal advice on contracts, we want to make you aware of some best practices concerning contract language. And to get you the best advice possible, we’ve recruited an industry expert to help us out.
Liz Lonsbrough, the owner of L Squared Events, has created top notch and unique domestic and international events for nearly 20 years. She knows her way around an event-planning contract and was kind enough to lend us her expertise.
But before we dive in too deep, what is a force majeure clause?
Force Majeure Clauses Defined for Event Planners
According to legaldictionary.net, force majeure means “superior force.” In the world of event-planning, planners know force majeure as the “Act of God” clause. The purpose of the force majeure clause is to cover your liability if you need to cancel an event due to unforeseen acts of nature like earthquakes, floods, hurricanes, tornadoes, or volcanoes
Our expert, Liz, told us that the clause is standard in most event-planning contracts, and if it isn’t already, should be part of your contract language. This clause can help cover your vendor and hotel liabilities in case the worst happens and you need to cancel your plans due to a catastrophic event.
What are its limitations to coverage?
Again, we asked our expert event planner about her experiences with force majeure clauses. Liz reiterated that the force majeure clause is necessary in case something catastrophic impacts your event. However, she added, applying a force majeure clause for an event cancellation is difficult and rarely occurs.
In Liz’s experience, it’s not a catastrophic event or “Act of God” that is most likely to impact your event. More commonly, you will encounter complications not covered under your basic force-majeure clause, like a global pandemic or:
-Bad weather (the non-catastrophic kind)
-Flight delays or transportation problems
-Vendor or venue-related complications
-Other events that conflict with your event
-Regional and geographical complications
So, while it’s important to include in your contract, the execution can be difficult. It can be hard to prove that your attendees absolutely can’t get to your destination due to weather issues. A threat of a storm might cause an increase in attrition rather than be viewed as cancelable under this clause.
So how do you protect yourself from unforeseen circumstances and financial risk?
Event-Planning Contract Best Practices
If you’ve done some research into this, you’ve likely seen suggestions around using additional language in your contracts to cover as many potential issues as possible. Phrases like “situations beyond the control of both parties” or “financially impractical” could help you cover your liability above and beyond a force majeure clause.
Again, we’re not dishing out legal advice. But we did ask our own expert about loading your contracts with this type of language. Liz’s thoughts are, you could, but it may be difficult to get vendors or hotel partners to sign off on them.
Here’s why. Event contracts with your vendors and hotel partners need to be mutually beneficial. If you expose your business partners to too much risk, they may not want to sign your contract. Just like you, these partners don’t want to incur unnecessary financial burden if you need to cancel. Instead, Liz suggested viewing your contracts through the eyes of both parties.
Here are five of Liz’s best practices to keep in mind when you create your contracts:
1. Create a contract that is beneficial to both parties.
2. Establish clear communication and guidelines – if you sense that something, like attrition, might be an issue, alert your hotel contact.
3. Pay attention to what you sign, particularly to what cancellation clauses say. Make sure you understand exactly what’s required of you should you have to cancel.
4. Make sure your attrition clauses cover you should something happens that impacts your event’s attendance but doesn’t cancel it. You want to be protected yet not undercut yourself too much that you might be tight on space if/when your program reaches its full potential.
5. Understand that it’s a business, and both parties want to be protected – Be a good partner.
Following Liz’s suggestions above can help you build better relationships with your partners and create solid contracts that make both parties feel more comfortable.
What if You Have to Cancel Your Event?
Hopefully, you will never encounter a catastrophic situation covered by a force majeure clause. But, a time may come when you will have to cancel an event. Our expert refers to this situation as one of the “worst possible outcomes an event planner can face.”
“Both the planners and vendors have invested a lot of time, money, and effort into planning the event. If a situation arises that forces you to cancel, it negatively impacts both parties,” says Liz.
As devastating as an event cancellation can be, there are ways to handle it that can minimize the damage and dull the pain for you and your vendors.
Liz provided us with the following seven suggestions to help you deal with a possible event cancellation:
1. Be creative. If you can move the event or work out another way to have the event – do it.
2. Always have backup plans and prepare for the worst. While it may not be as good as your original plan, it’s better than canceling your event.
3. If you have a multiple-event contract with a vendor or venue, understand how canceling one event will impact future events.
4. Consider working out relief for both parties based on percentages, especially if you’re dealing with attendance attrition rather than a total cancellation.
5. Put everything leading up to your event in writing, especially conversations related to contracts and arrangements.
6. Be considerate and transparent. No one is going to be happy about a cancellation, so try to see things from both sides.
7. As hard as it is to do, remove your emotions from the situation. It’s business at the end of the day, and both parties want an amicable solution.
Developing strong relationships with your vendors is one of the best ways to minimize the damage of cancellations and have the flexibility to make changes to your event.
One Final Note From Our Event-Planning Expert
Contracts are a necessary parts of event planning. They protect your business, while also creating trust and comfort for both parties involved.
To close things out, Liz gave us a few final pieces of advice for when you’re creating your contracts and entering into agreements with vendors:
“Remember, event planning is a people business. Protect your business, but also be transparent, consider your vendor’s risks, and build strong relationships.”
If you’re looking for a trusted business partner for your event planning, MeetingPlay is standing by to help. Contact us today to learn how we can help you boost your event engagement and help you earn a better return on your investment.
Liz Lonsbrough is the founding owner of L Squared Events LLC, an independent event planning company. She has over seventeen years of experience in the hospitality industry with a degree in Hospitality, Travel and Tourism from Bowling Green State University. Through her career she has worked in all aspects of the industry; from hotel sales, meeting planning services to corporate event planning. Liz has managed numerous high-profile events with great success. Her attention to detail and overwhelming drive for greatness makes her a top planner in the events industry. www.lsquaredevents.com