In the near future, in-person meetings for nonprofits will return to common practice. Venable, a law firm with an extensive nonprofit practice, has published an article focusing on five key provisions to help you limit your nonprofit’s financial and legal liabilities in contracts with hotels and other venues.
1. Liability and Indemnification
Seek to limit contractual provisions laying full blame on your nonprofit for unexpected events such as food poisoning, accidents, or exposure to the coronavirus that causes COVID-19. Do not take complete responsibility for the behavior of all attendees and vendors. You would also be wise to seek language that excludes the venue from indemnity in any situation involving COVID-19.
2. Room Reselling Due to Cancellations
Although in-person meetings are soon likely, beware of unfavorable cancellation clauses that may penalize your organization should sudden restrictions be necessary again. Often, standard venue contracts contain a scale of damages for any cancellations. Instead, seek to include a “duty to mitigate” clause, which gives your organization credit for resold rooms and space. Furthermore, language should stipulate reduced rates for any penalties, such as partial percentages of hotel room costs.
3. Force Majeure Considerations
Include a clause for force majeure because it stipulates circumstances when a party may cancel without penalties. There are several important issues to consider within this provision, including:
- Ensure the force majeure provisions in venue contracts cover the COVID-19 pandemic as well as future widespread health emergencies.
- If a meeting location is known for a volatile climate, insert a clause factoring this in as a pardonable force majeure
- Increase the scope of standard language saying “illegal or impossible” to a broader statement that includes the phrase “commercially impractical.”
- Considerations for force majeure exclusions should include both underperformance as well as cancellations.
Venable published a longer article explaining force majeure provisions in detail.
4. Failure To Provide Venue Space
If your nonprofit will use a convention center or multiple hotels, include language allowing you to back out of an agreement if any part of the venue space becomes unavailable or is refused for any reason.
5. Warranty of Condition
This provision allows your organization to cancel a contract without penalty if a hotel or its services significantly deteriorate between contract signing and the event date.
The best way to approach hotel and venue contracts is by being proactive. Draft your own model contract containing these important legal protection provisions because standard hotel contracts will not protect your interests at all. Looking after your own interests could save your organization thousands of dollars and great trouble should unexpected circumstances occur. When you have your own contractual language in place, negotiations will be much easier, with the final result being a contract that benefits all parties.
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