The Importance of a Well-Written Event Contract in a Time of Crisis
Alyssa Perna has over a decade of event operations experience in leading multinational business-to-business conferences, festivals and trade shows, press conferences, large-scale fundraisers, complex social events, and more. She is the founder of Experience Events, as well as the Managing Director of Ingenuity Cleveland. She’s also the lead instructor (and tutor!) of the Corporate Event Planning Course at QC Event School.
The COVID-19 health crisis has brought about many challenges in the event planning industry. One of the biggest obstacles lately is knowing how to handle contractual event agreements during a time of crisis.
In the best-case scenario, both parties will work together in unity. This way, you can outline a deal that will benefit everyone. But this won’t always be the case. When things don’t go as smoothly as you’d hope, it can become daunting and complicated to navigate.
Whether you’re a corporate event planner, a party planner, a wedding planner, etc., the following applies to YOUR business! Because ultimately, determining the fate of all parties goes back to how well your legal agreement was written in the first place.
As such, I will reflect on the importance of a well-written contract, and why having one for every job is so critical within our industry.
What is a Crisis?
A crisis is a series of events that leads to change. It can be brought on by:
- Instability in social affairs
- Economic difficulties
- Political issues
- International circumstances
Alternately, it may be a troublesome, global situation like COVID-19. Either way, a crisis leads to a time of difficulty.
Stages of a Crisis
During a pre-crisis, all parties monitor their risks and determine how to manage a potential crisis. Those involved with responding to the crisis will outline a clear Crisis Management Process.
During the crisis stage, all information is analyzed for decision-making. If you’re a corporate event planner, a promotional event planner, or a festival planner, crisis messaging will also need to be distributed to stakeholders.
During the post-crisis stage, these stakeholders must be followed-up with. If relevant to the type of event you’re putting together, organizations will discuss next steps, as well as how to move forward once the damage has been assessed.
Effective Crisis Communication
When facing a crisis, effective communication is key! As the professional planner, there will be many people looking to you for guidance. You clients, vendors, suppliers, and venues are all examples of parties who will likely turn to you for answers.
They’ll want to know what they can expect to happen next, as it pertains to your agreement with them.
Specifically, these people will all want to understand the ramifications this crisis will have on the event. Ask yourself:
- How will your agreement with them be affected as a result?
- What are the next logical steps?
- Is there a timeline during which these steps will be taken?
Below are some useful tips to help you prepare an effective Crisis Communication Plan for your business. This way, should an unforeseen crisis occur, you’ll know how to handle it.
- Define your audience.
- These are all the people you will need to contact immediately, in the event of a crisis.
- This includes: clients, attendees, sponsors, speakers, vendors, contractors, the venue, etc.
- Determine your key internal points of contact for each audience.
- Identify who you’ve been speaking with thus far for each audience, and ensure you have their contact information on-hand.
- Identify your communication platforms.
- This refers to how you’ve been communicating with each audience, and how you would intend to reach out in the event of a crisis.
- Examples include: email, the company website, social media, etc.
- Put together a communication plan and messaging.
- Map out who you will contact (and in which order, if that helps), how you intend to contact them, and what you would say.
- Manage media, and inquiries from stakeholders.
- Media is likely being utilized to market the event to the masses.
- Update it often, so people know what’s going on.
- If applicable, make sure you stay in touch with any and all stakeholders for the event. They must also be kept in the loop.
Navigating a Crisis
Whether you work for a venue, or you’re a planner who has signed a contract with a venue, it’s best for both parties to have open and honest communication regarding the event. Everyone needs to know how to proceed, and be on the same page.
At this point during a crisis, contract terms are likely already being referenced. However, if all parties cannot come to an agreement, you’ll find that these contract terms will become the first AND last line of defense.
This is why it’s of the utmost importance to have well-written, clear, and fair language in your agreement. It’s meant to protect ALL parties involved during a crisis – including you and your business!
As professional planners, what can we do to protect our events?
There are a few key areas you must always cover when contracting events, venues, and partnerships. Likewise, these elements must be clearly laid out within your contract, and understood by all parties before anyone provides a signature.
Here are some examples of what I’m referring to…
A deposit is a partial, up-front payment. While it’s typically given after the contract has been signed, it’s outlined within the contract itself. This is so that the party paying the deposit understands – and legally agrees – to this obligation.
A deposit is given as a form of security. It can come in many shapes and sizes. For instance, a deposit could outline a percentage of the total amount due (per your contract). It can also be an up-front lump sum, determined by the organization issuing the contract.
In any event contract, a clear cancellation policy should be outlined. This cancellation policy should also contain its own set of clauses. Even if there is no cancellation permitted, it should always be in your contract regardless.
Many agreements you’ll come across in this industry contain a cancellation chart, or language, which outlines terms in the event that either party cancels. In many cases, this could be a flat fee for cancellation. In others, it may look like a chart, outlining a certain percentage due at the time of cancellation.
In well-written event planner contracts, a rebook clause is also outlined. This would mean that a certain percentage of the cancellation fee can be used as a deposit towards a future event.
Force majeure is an unforeseeable circumstance that prevents someone from fulfilling a contract. According to Investopedia, this is a clause within a contract that completely removes a party’s liability “in the face of natural and/or unavoidable catastrophes that interrupt the expected course of events, and restrict participants from fulfilling obligations”.
All parties signing an event contract should aim to have a mutual force majeure clause in their agreement. This will ensure that everyone is protected from catastrophes beyond their control, so disastrous consequences can be avoided.
Indemnity is a contractual obligation that “requires one party to compensate the loss incurred to the other party, due to the acts of the indemnitor or any other party”.
For example, let’s say that a guest is injured during an event. Regardless of who is at fault (i.e. the venue, the event host(s), the attendee themselves, or any other party), the loss/damage sits where it falls.
That is to say: because one party agreed to be the indemnitor, they are then legally obligated to recoup any and all costs pertaining to the incident in question. As such, the other party will be indemnified – or excused – from suffering the financial consequences of this occurrence.
By far, the most important part of any contract is making sure that it is signed! Without a signed contract, you have no agreement in the first place.
As a rule of thumb, NEVER do work for a client, vendor, venue, or any other party until the contract has been signed by all those involved. Otherwise, you could be putting your business at risk!
During a crisis, you need to think ahead. Have a game plan ready for how you intend to handle situations that have been impacted by these circumstances. In addition to all this, always have a clear communication plan in place.
If you ever need to navigate a crisis, remember to reference contractual agreements. Try your hardest to work in partnership with all parties involved, so you can come up with a mutually acceptable agreement on how to move forward.
As you can imagine, due to recent world events, the event industry will be working hard to modify contract language, in order to protect themselves during a disaster. It’s in the best interest of you and your event planning business to do the same!
That way, going forward, you’ll be prepared for anything!