WINTER LOCKDOWN
Avoiding Liability When Crisis Hits Your Corporate Event.
It’s January 2015 and the Chicago polar vortex has just made an unwelcomed re-appearance and you are on your way to a large scale business event. You have accounted for all the details, venue, catering, entertainment, parking, etc. Then all of a sudden a snow storm hits and like so many other commuters, you are stuck in winter storm grid-lock for hours. Not only can you not make your event but neither can the one hundred plus guests who are on their way to your event. As the cancellation and delay messages from the vendors pour in and the venue alerts you that it has to shut down, you wonder to yourself: “Did I prepare for this? Am I going to get paid? Who do I have to pay?” Liability associated with last minute disasters is a reality that threatens to hinder all businesses. As such, it is imperative to know and be familiar with the factors of corporate events that create liabilities and to learn how to minimize risk and increase the safety of clients and event attendees. The good news is all events disasters have some basic liability issues in common.
5 key preventative tools that can help protect your business
1) Have detailed written Contractual Agreements;
2) Make sure the payment of compensation is clearly defined in the Agreement;
3) Include an Indemnity Clause in the Agreement;
4) Include an Insurance Clause in the Agreement; and
5) Have a well written Modification and Termination Clause.
The Contractual Agreement
The Contractual Agreement is the key blue print that designates each party’s obligations and responsibilities. It is the fundamental document for all liabilities associated with the event, present and future. In addition, it defines all the boundaries of the agreement such as payment, authority, liability, indemnity and insurance. Many event planners’ make the mistake of executing an agreement without doing the necessary research or employing a business attorney. At the time, securing the contract seems like the most important task. But the liability associated with a badly written contract can incur a much higher cost than the compensation received for the services rendered, especially when an unforeseen disaster occurs. Particularly in the event planning industry, where change is the only constant, allocation of the liabilities associated with any changes should be the first priority. The initial expense invested into a solid agreement will be far more valuable to the future success and sustainability of your business than one hastily executed bad agreement or worse no agreement at all.
Compensation
The goal of any agreement, for any event, is to get paid. In a snow storm disaster, where your event is cancelled due to no cause of any particular party, money has still been spent in preparation, guests have bought tickets, and someone will want to be paid for their efforts. There are payments due to you for your services and there are the payments to vendors and/or subcontractors hired for the event. If your business subcontracts vendors for any event, then your business will be liable to pay the vendors according to the compensation provision of your agreement. In a disaster snow storm scenario, you may not be paid in a timely manner but you are still liable to pay the vendors. Because the compensation language in an agreement will determine who gets paid, when they get paid, and under what circumstances, it is a pivotal clause of the agreement. This is where the aid of a business attorney can be essential, an attorney can add the necessary language to make the responsibilities of payment clear to all parties and an attorney can execute release forms for the vendor(s) which can further reduce your liability.
Indemnity Clause
Indemnity clauses specify the obligation of one party to defend another party in a suit that arises out of the contract between the two parties. Indemnity clauses can be unilateral or bilateral, meaning one party can only have to defend the second or both parties have to defend each other. In a disaster situation like a snow storm, it is likely that someone will be unhappy with how they are compensated. In order to protect your business you want a detailed indemnity clause in your agreement. Because events are volatile by nature and there is always the possibility of change or cancellation and thus, the possibility that someone is unhappy or dissatisfied, it is imperative that a detailed indemnification clause is included in any event contract.
Insurance Clause
Adequate insurance equals security. Insurance is key to defending against “mayhem,” and no business should operate without it. Snow storms qualify as mayhem and the right insurance would cover your company for all cost associated. Because the types of insurance, the need for specific types insurance, and the requirements to provide insurance are multi-faceted and vary, adequate time should be spent on detailing what insurance is required and which party is responsible for providing it. Failing to identify necessary insurance or even insurance that should be included can be detrimental to all parties involved and it can incur costs that far exceed any potential profit from the event.
Modification and Termination
Modification and termination clauses are often overlooked, but in an industry as uncertain as event planning, such clauses are very important. In the event of a major modification or termination how is payment affected? The liabilities associated with modification and/or termination can be large and they affect all parties involved. As such, the allocation of the potential liabilities needs to be clearly stated in the agreement, not only between your business and the client, but also between the client and the vendor(s). Thus, a well written and detailed modification and termination clause needs to be included in any event agreement.
Conclusion
Each business and each event is unique and the legal concerns will vary, this article is meant to highlight major issues and illustrate the types
of legal concerns that should be considered before executing an event agreement. In doing so, when the snow storm hits, instead of feeling hopeless and lost you can sit back and enjoy the snow, knowing that agreement adequately addresses your situation.
For further information please contact Amber M. Johns, partner and
corporate attorney at Jackson Corporate Law Offices, P.C.,
LEGAL DISLCAIMER: The information provided in this article does not constitute legal advice and is not intended by either the author, Amber M. Johns, or Jackson Corporate Law Offices, P.C. to do so. Persons in need of legal advice related to a subject discussed in this article should contact a lawyer who is qualified to practice in that area of law. The articles are the property of Amber M. Johns and Jackson Corporate Law Offices, P.C. The placement of articles is not meant as an endorsement of Amber M. Johns and/or Jackson Corporate Law Offices, P.C. for legal representation. This is article is presented for current events and public discussion purposes only. In seeking legal counsel in any of the areas discussed in the article, consumers should carefully select the professionals they choose to represent them in such legal matters and are solely responsible for this decision. The information, views and opinions expressed in the articles are those of Amber M. Johns and Jackson Corporate Law Offices, P.C.
AMBER M JOHNS