supplemental materials - are you ready? disaster prep for meeting, convention, and trade show...

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SUPPLEMENTAL MATERIAL

ARE YOU READY?

DISASTER PREP FOR MEETING, CONVENTION, AND

TRADE SHOW PROFESSIONALS

By Marlene Blas & George G. Fenich

© FENICH & BLAS FOR DMAI MARCH 2013

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EXAMPLESNOWSTORM CHICAGO

• A winter meeting is being held in a warm climate. Thirty percent of the attendees are scheduled to fly from the Midwest. Chicago O'Hare airport closes due to a snowstorm. The meeting sponsor should be able to partially terminate its obligations and not be held responsible for performance guarantees for the 30 percent of attendees unable to travel to the meeting. Unless the contract provides for total termination in this circumstance, the meeting sponsor is still responsible for holding the meeting with the other 70 percent of the attendees that can travel. Both parties must agree to the percentages.


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EXAMPLEHURRICANE

• A hurricane is forecast at the destination the group intends on visiting. Some people brave the elements, others choose to stay home. Is the group subject to attrition penalties for partial performance?

• Solution: Force majeure indicates a situation that is beyond the control of either party involved. Be sure your force majeure clause includes a grocery list of calamities covered, such as weather, terror, war, “or any other event beyond the party’s control,” Dunn said. There should be some language that protects the group in the case where the “standard of impact makes travel inadvisable, impractical or commercially impracticable.” When negotiating the contract, try to get the property to waive attrition for partial performance in such cases of partial performance, emphasizing that some business is better than none at all.


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EXAMPLEIMPRACTIBILITY

• If a meeting is being arranged for the purpose of global team-building and events transpire that make it impossible for employees from abroad to attend, the purpose of the meeting has been frustrated. If this purpose is not expressly outlined in the hotel contract in a “purpose of meeting” clause, you may be out of luck when trying to avoid attrition or cancellation fees.


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EXAMPLEPARTIAL TERMINATION

• If the clause is written as Foster suggests, a client wouldn’t be held responsible for 100% of performance in the case where 30% of attendees are prevented from traveling to the Caribbean for a meeting due to a snowstorm at home that closed the airport. In such a case, “the sponsor should be able to partially terminate its obligations and not be held responsible for performance guarantees for the 30% of attendees unable to travel to the meeting. Unless the contract provides for total termination in this circumstance, the meeting sponsor is still responsible for holding the meeting with the other 70% of the attendees that could travel. Of course, both parties must agree to the percentages in advance.”


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EXAMPLEGOVERNMENT EMPLOYEES

• Hotel-drafted provision says that the reason for termination must be an “emergency.” As one association learned the hard way, the definition of “emergency” depends on who's doing the defining. The group canceled a meeting because attendees — all government employees — were obligated to attend a government-sponsored event, the date of which was moved, creating a conflict with the association's meeting. In upholding an award of $275,000 for the hotel, an appeals court said, in part, that the situation was not an “emergency” of the type contemplated in the contract.


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EXAMPLEGULF WAR FEAR OF TRAVEL

• An example of a case where the force majeure argument failed, and the hotel prevailed in obtaining a judgment requiring the meeting sponsor to pay lost profits for an unexcused cancellation, is found in 1200 Scottsdale Road General Partners v. Kuhn Farm Machinery, Inc., 909 P.2d 408 (Ariz. App. 1995). There, a large corporate meeting, scheduled for the Phoenix area, was cancelled when, during the Gulf War in February 1991, the sponsor of the conference concluded that participants would not fly to Phoenix to attend. However, the court rejected the argument, holding that, merely because some of the expected attendees would not fly to Phoenix due to Gulf War anxiety, the conference was not rendered impossible or even impractical. The conference simply might not be as successful or as large as the sponsors had hoped.


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EXAMPLELACK OF INTEREST IN CONCERT• The recent U.S. case of Outrigger v SFX is an excellent example of this. In that

case, the claimant contracted to host a music conference for the defendants and held some 3,000 hotel rooms for them. In early 2002, the defendants sought to terminate the contract because they had received insufficient bookings. They tried to rely on the force majeure clause in the contract and argued that ‘the events of September 11 coupled with the fragile condition of the U.S. and international consumer economies’ constituted force majeure events.

• The force majeure clause in the contract defined a force majeure event as one that made performance ‘inadvisable, illegal or impossible.’ Whilst the parties agreed that the terrorist attacks of September 11 were an event of force majeure, the claimant contended that they did not make the contract ‘inadvisable’. The court gave much thought to what ‘inadvisable’ meant. The judge(s) looked at case law on force majeure that held that non-performance dictated by economic hardship is not enough to fall within a force majeure provision. The court concluded that:

• ‘From an economic standpoint, it was certainly unwise, or economically inadvisable, for Defendants to continue with the conference. Nonetheless a force majeure clause does not excuse performance for economic inadvisability, even when the economic conditions are the product of a force majeure event. The force majeure clause does not contain language that excuses performance on the basis of poor economic conditions.’ 266F. Supp. 2d 1214, 5 February 2003.


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SAMPLE FORCE MAJEURE CLAUSE

• Force Majeure – the parties performance under this agreement is subject to acts o God, war, government regulation, threats or acts of terrorism or similar acts, government travel advisories, disaster, strikes (except those involving the Hotel’s employees or agents), civil disorder, curtailment of transportation facilities, or any other cause beyond the parties control,, making it inadvisable, illegal or impossible to perform their obligations under the Agreement. Either party may cancel the Agreement for any one or more such reasons upon written notice to the other. In the event the Group decides to hold its ‘event’ despite such circumstance, the Hotel shall waive any fees related to a reduced-size ‘event’ (including any room attrition fees, function space rental, food and beverage attrition fees) and shall offer the guests of the Group any lower room rat offered to guests during the contract dates

Source: D. Valentine (2009). Force Majeure – planning for the unexpected, Excel Meetings and Events, Google search on June 20, 2010.


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IMPOSSIBILITY OF PERFORMANCE

• The performance obligations of a party may be terminated without liability if the performance has been made impossible by events outside the control of the parties occurring after the contract was made. There are five main types of impossibility: (1) destruction, deterioration, or unavailability of the subject matter or tangible means of performance; (2) failure of the agreed-upon means of performance or contemplated mode of delivery or payment; (3) supervening illegality; (4) failure of the intangible means of performance; and (5) death or incapacity of a party.

• Source: Foster, J (2005). When bad things happen to good meetings.© FENICH & BLAS FOR DMAI MARCH 2013

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IMPRACTICABILITY OF PERFORMANCE

• Termination of obligations under a contract may be granted when performance has been rendered excessively difficult or harmful by an unforeseen act or occurrence outside the control of either party. The Restatement of Contracts 2nd, §261 defines impracticability as follows: "When, after a contract is made, a party’s performance is made impracticable without his (or her) fault by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made, his (or her) duty to render that performance is discharged, unless the language or the circumstances indicate the contrary."

• Source: Foster, J (2005). When bad things happen to good meetings.


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FRUSTRATION OF PURPOSE• In frustration cases, the party seeking discharge is not claiming

that (s)he "cannot" perform, in the sense of inability. Rather, (s)he is claiming that it makes no sense for him/her to perform, because what (s)he will get in return does not have the value expected at the time (s)he entered into the contract. The four main factors courts have considered in deciding whether to apply the doctrine of frustration, are: (1) the object of one of the parties in entering into the contract must be frustrated by a supervening event; (2) the other party must also have contracted on basis of the attainment of this object, i.e., it was a basic assumption common to both parties; (3) the principal purpose of the contract must be totally frustrated or nearly total; and (4) the party seeking to use the defense must not have contributed to the frustrating event or non-occurrence.

• Source: Foster, J (2005). When bad things happen to good meetings.


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EVENT CANCELLATION INSURANCE

• INSURANCE TO MITIGATE RISK

• KNOWN AS ‘BUSINESS INTERRUPTION INSURANCE’ IN OTHER INDUSTRIES

• WHETHER TO INVEST IN IT DEPENDS UPON HOW IMPORTANT THE MEETING/EVENT IS– Board Meeting for 65 probably not worth it– Annual event for 3,000 probably is

• PREMIUM SET ON CASE-BY-CASE BASIS– About $1 to $5 per $100 of exposure


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TRAVEL INSURANCE• CAN COVER GROUPS AS WELL AS INDIVIDUALS

• CAN COVER– ILLNESS– LOST BAGGAGE– BANKRUPT TOUR OPERATOR– MEDICAL / DENTAL EMERGENCIES– MEDICAL EVACUATION– OTHER TRAVEL INTERRUPTIONS

• COST = APP. 10% OF THE TRIP COST

• IN NORTH CAROLINA, LICENSE IS REQUIRED TO SELL TRAVEL INSURANCE– COMMISSION = 29% TO 40%

• INFORMATION PROVIDED BY – Sherry Fisher | Business Development Manager, US Travel Sales | RBC U.S. Insurance Services Inc. | T. 919-777-

0442 | C. 910-551-8837 [[email protected]


mailto:[email protected]

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WEB SITES THAT TRACK UNION ACTIVITY

• www.UniteHere.org (Hotel Employees and Restaurant Employees)

• www.Hotelworkersunited.org IUF.org (International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Worker's Association)

• www.ALPA.org (Airline Pilots Association) www.TWU.org (Transport Workers Union)


http://www.pcma.org/x9905.xml?thirdparty=%22http://www.unitehere.org/%22

http://www.pcma.org/x9905.xml?thirdparty=%22http://www.hotelworkersunited.org/%22

http://www.pcma.org/x9905.xml?thirdparty=%22http://www.alpa.org/%22

http://www.pcma.org/x9905.xml?thirdparty=%22http://www.twu.org/%22

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BOOKS

• Foster, J. – Meeting & Facility Contracts, Meetings & Liability – Independent Meeting Planners & the Law

• Goldberg, J.M.– The Meeting Planner's Legal Handbook

• Sorin, D.– The Special Events Advisor: A Business and Legal Guide for

Event Professionals

• Barth, S.– Hospitality Law: Managing Legal Issues in the Hospitality

Industry


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ATTORNEYS• Devlin, Lisa Sommer - Phoenix

• Dunn, Barbara – St. Louis

• Foster, John – Atlanta

• Goldberg, James – Washington DC

• Grimes, Joshua – Washington & Philadelphia

• Howe, Jon - Chicago

• Seeley, James – San Francisco

• Tesdahl, Ben – Washington DC


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GEORGE G. FENICH, PH.D.

• PROFESSOR

• SCHOOL OF HOSPITALITY LEADERSHIP

• EAST CAROLINA UNIVERSITY

• E-MAIL: [email protected]

• Voice: 252.328.2190

• PRINCIPAL

• FENICH & ASSOCIATES LLC

• WEBSITE:

fenich.com

• Voice: 252.561.5329

• AUTHOR– Meetings, Expositions, Events

and Conventions: an introduction to the industry



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Marlene Blas, MTA, CMP

• Associate Director for Meetings and Events

• CA Western School of Law

• E-MAIL: [email protected]

• Voice: 619.525.1689

• Program Advisor and Instructor

• California State University, San Marcos

• WEBSITE:

http://www.csusm.edu/el/certificateprograms/eventplanning/beaplanner.html© FENICH & BLAS FOR DMAI MARCH 2013


http://www.csusm.edu/el/certificateprograms/eventplanning/beaplanner.html




supplemental materials - are you ready? disaster prep for meeting, convention, and trade show...

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