Contracts for Meeting Space – A Little Caution In Advance Will Go A Long Way

Richard A. Samuels
Director, Corporate Department
January 1, 2001

Your technology company needs to rent meeting space at a hotel or convention center for a seminar or large meeting. Aside from obvious business considerations like location and access, facility size and quality, the adequacy of internet connections that may be necessary for your participants, price, food service, and the availability of hotel lodging and other amenities, you should not neglect to read and understand your contract with the facility. The “small print” in the standard form contract for meeting space will govern not only the basic terms of the rental, but also your liability for cancellation and damage and, to the frequent surprise of meeting organizers, the facility’s limitation of liability for canceling or moving your event.

Virtually all experienced conference facilities will require that you enter into a written contract for your lease of the space. That will be the case even where event organizers are regular, repeat customers of a facility. Of course, having a written agreement that confirms your arrangement and its terms documents your reservation of space and the terms of the deal, which is to your advantage as well as that of the facility.

A customary contract for meeting space will typically be a two-page “form” agreement with some fairly tightly spaced, small type provisions. In usual circumstances, particularly in a market in which desirable meeting space is at a premium and tends to be reserved well in advance, meeting space contracts are not negotiated and varied. Customary contracts include the following provisions, and understanding them in advance can enhance your planning and avoid unpleasant surprises:

  • Price, date, time and meeting room. Of course, nothing is more basic to the arrangement than these terms. Make certain that the written contract is clear and consistent with your understanding of which rooms and areas you have reserved, the charges for your rental, and the dates and precise times of the rental. Do not assume that you have access to the rented facilities for set up, running a little over, or knock down of your meeting: most desirable facilities often tightly schedule their events, and an agreement that runs through 4:30 or that begins at 5:30 means precisely that. Note that the facility may have the right to move you from your reserved function space to other space. Have in mind that food, beverage, and hotel room minimum guaranties are just that. Normally, last-minute reductions will result in a fee equal to a hefty percentage of the facility’s reduced revenue, and even an increase may trigger a surcharge. The facility may also specify a limit on the percentage by which you can exceed your guarantied numbers.
  • Cancellation liability. Normally, unless special credit arrangements are made, your payment for the facility rental will be due in advance of the event, sometimes with partial payment months in advance and the balance due a few days in advance. While policies vary, cancellation of the event will typically trigger a penalty based upon an increasing percentage of projected facility revenue. Within 30 days of the event, the cancellation penalty may be 80% or even 100% of projected revenue, which are the total expected rental, food and beverage fees, not the just facility’s anticipated profits.While the contract for meeting space will not say this, the facility will have an obligation, under general principles of law, to “mitigate its damages” by making reasonable attempts to replace your cancelled rental. However, when the facility has your deposit, you should anticipate that it will return to you only the amount (if any) by which the deposit may exceed your contractual cancellation liability. A claim that you should have more of your deposit returned to you because the facility failed to mitigate its damages, or even figuring out whether or not it took or failed to take reasonable steps to replace your event, may require you to go to court. That is normally not going to be an efficient use of your time and money except in connection with very large events. Of course if your cancellation has preceded your full deposit, you may owe a cancellation fee to the facility beyond the amount of the deposit that you have made.
  • Liability for damage. A customary contract for meeting space will specify the scope of the facility’s liability for damages as well as the event organizer’s. It should come as no surprise that the typical contract provisions absolve the facility from liability to you or to your guests or exhibitors for damage to or loss of items brought into the facility’s space. Without such a provision, the facility would certainly have a duty of reasonable care for the security of your and your guest’s property, such as damage or theft of electronic equipment or exhibit samples.Conversely, a customary meeting space contract will provide that you will be responsible and must reimburse the facility for any damage to the meeting facilities caused by you or your guests, exhibitors, or contractors-regardless of whether you were negligent in monitoring or supervising those people. So if your crowd gets a little out of control in your reserved block of rooms, which has occurred in some notable cases within the past few years, you may well have to foot that bill.