What is an Event Venue Contract?
Event venue contracts are agreements between owners of event venues or venue management companies (venue owners) and event planners or organizers (as appropriate). Such contracts generally set out the complete agreement between the venue owner and the event planner. The contract is crucial for event planners to ensure that they have the space reserved for the planned date and time so that they can plan and advertise the event (including selling tickets). For event planners that wish to later cancel or reschedule the event (or the venue owner to cancel or reschedule the event), the contract provides for such cancellation (and resulting refunds to ticket purchasers as applicable) . For venue owners, the event venue contract provides assurance that their venue will not be reserved by someone else for that particular date and time once a deposit has been accepted. Likewise, for venue owners that will consider a cancellation or rescheduling by the event planner, the contract allows them to do so but otherwise require the event planner to adhere to the cancellation fee schedule or other agreed upon fee schedule in the event of a cancellation or postponement.
Key Elements of a Venue Contract
There are three essential components to every event venue contract. The first has to do with the parties to the contract, then information related to the event itself, and ultimately the money to be paid by the customer to the facility.
1. Parties to the Contract. This is really important. And, it’s so much more than just the name of the facility and the name of the customer. You want to make sure that you are contracting with the company that will operate the event space, and that, if anything goes wrong, you’ll have legal recourse against the company you believe you’re contracting with. For instance, if you’re leasing space, this may be the person or company that owns the space. Or, you may be dealing with an operator that leases the space from a facility owner. In this case, you want to have the operator correctly identified as party to the contract and not the owner.
But, in addition, you should also identify everyone who has right of access to the space you’re renting, especially if the person you’re contracting with is just a broker or salesperson for the facility. So for instance, if you’re leasing space from, say, Smith Holdings, Inc., you might want to also consent to forbidding access to anyone other than Smith Holdings, Inc.’s employees and agents. That way, if someone else were to try and enter the space and you were also charged with trespassing, you’d at least have some legal basis as a contact in the space. If you became a party to the contract but there were no restrictions on other people allowed to use the space, you could be prevented from trying to defend yourself.
2. Event Space. Of course, the contract should clearly identify the space being used and how long you’re there. At the same time, there should be a clear explanation of what is being set aside for you for your event and used exclusively by you so that no one else can use those facilities. So, for instance, maybe you’re using the hotel ballroom and patio. Do you also get to use the lobby or the bar? What about other ballrooms, banquet space an additional patio? These are all parts of the event space that need to be clearly set out in the contract and it should be made clear whether these spaces are included (or not).
3. Money. Money is self-explanatory. But this is the place where you spell out how much money is to be paid for the use of the event space. Sometimes, payment is even broken down into milestones. You may need to make a deposit when you sign the contract with an additional payment next month, etc. And, the final payment provides that the remainder of the balance is due.
Example Venue Contract Clauses
It is important for organizations considering different venue options to pay attention to the fine print and ask about any provisions they do not understand. A good general understanding of those aspects of the agreement can help you be better prepared to negotiate that contract to suit your needs.
Cancellations often cover both cancellation by the venue and sanctions for being forced to cancel by the organization planning the event. One such cancellation clause is this example: Either party may cancel this Agreement for failure of the other party to perform any of it’s obligations hereunder. In addition to breaches by the venue itself, this clause allows the client seeking to cancel to seek recovery against the venue party if the venue fails to perform by not supplying services, rooms or any other needed aspect of the agreement. The client can also be in breach of the contract, for example if the client were to cancel too close to the event. Some venues may have a cancellation policy that allows for a certain amount of refund depending on how close the cancellation is. An example of such a provision is: If the event is cancelled by contract approval date, client is entitled to 100% refund[, and if cancellation occurs within 90 days of the event, is entitled to no refund]. In some cases, event venues will have a force majeure provision. Such clauses usually will have language similar to the following: Either party hereto may cancel this agreement upon written notice to the other if the performance hereunder is prevented by acts of God, strikes, lockouts, work stoppages, labor disturbances, acts of public enemy or governmental authority, terrorism, civil commotion, riot, interruption of transportation facilities, adverse weather conditions or similar causes beyond the control of the party whose performance is affected and that is not due to any fault or negligence of such party. The purpose of this type of clause is to excuse both parties from the performance of their obligations when those obligations are impossible to perform due to certain outside forces. Liability will be a frequent concern for the organization or client. In any contract, the parties may agree that one or both parties will be liable for certain types of damages or that the parties’ liability will be limited in some way. This is often done with the addition of an indemnification clause or a limitation of liability clause. It might look something like this: Client shall indemnify, defend and hold harmless [Venue] [, and Venue’s officers, directors, members, agents, employees or affiliates] from and against all claims, actions, liabilities, losses, damages, costs and expenses (including reasonable attorneys’ fees) arising out of any claim or action involving the Client [, and Client’s officers, directors, members, agents, employees or affiliates] to the extent [Venue’s] negligence or willful misconduct has not contributed to the claim or loss or any claim or loss caused by Client’s breach of this Agreement. Limitation of liability provisions in contracts may be expressed in many forms, but portions of the example below illustrate how certain contractual provisions may limit liability: CLIENT UNDERSTANDS AND AGREES THAT [VENUE] SHALL NOT BE LIABLE FOR ANY LOSS OR INJURY TO CLIENT, [CLIENT’S OFFICERS, DIRECTORS, MEMBERS, AGENTS, EMPLOYEES OR AFFILIATES], CLIENT’S PROPERTY OR PREMISES, ANY PROPERTY OF CLIENT’S SUBCONTRACTORS, GUESTS OR INVITED ADVISORS OR ANY OTHER ENTITY WHILE ON THE EVENT SITE. FURTHER, [VENUE] SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES; THE REMEDY OF CLIENT FOR ANY BREACH OF THIS AGREEMENT BY [VENUE] IS LIMITED EXCLUSIVELY TO DAMAGES ACTUALLY INCURRED BY CLIENT IF SUCH DAMAGES WERE CAUSED BY [VENUE’S] GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR RECKLESS CONDUCT; CLIENT’S RECOVERY FROM [VENUE] FOR ANY DIRECT DAMAGES SHALL BE LIMITED TO THE CONTRACT PRICE PAID BY CLIENT TO [VENUE]; AND CLIENT WAIVES ANY RIGHT TO RECOVER ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, SUCH AS BUT NOT LIMITED TO PUNITIVE OR EXEMPLARY DAMAGES, LOSS OF PROFITS, REVENUES OR PROSPECTIVE ECONOMIC ADVANTAGE, AND THE LIKE ARISING FROM OR RELATED TO [VENUE’S] PERFORMANCE UNDER OR RELATING TO THIS AGREEMENT.
How to Tailor Your Venue Contract
One of the most important things an event planner can do for their clients is to customize the contract for the specific needs of the event and the people involved. Most venues will have a contract that they use as a template for all of its events, but that does not mean that everything on that contract cannot be negotiated. The biggest obstacle to negotiation is often the perception that a client or planner cannot negotiate an agreement with a "big" venue because of its size, popularity, or country-wide notoriety. That is not true, and planners should encourage their clients to change any part of a form contract that they are not completely satisfied with, whether it is in reference to the venue itself, costs, the services provided, or anything else. Client’s are always best served when they point out parts of the contract that they would like changed rather than wait for the venue to offer to change it, something that is quite rare.
The most basic customization of a contract is simply removing provisions that are not relevant to the specific event. For example, if a venue only holds corporate events, it might have a provision referring to wedding gifts or items that can be included in wedding registries. This provision should obviously be removed from any contract not dealing with a wedding. Mutation in the terminology and names of events could often provide a needed removal of these irrelevant provisions.
Many contracts also include extensive lists of items that will be provided by the venue, which often can be simplified or modified. For example , there could be an entire paragraph detailing the types of chips and dips that will be available, which can be shortened to state no more than "chips and dips will be provided for the event." Clients that use the venue often enough to know what will be provided through experience can try to keep the lists of provided items as short as possible, unless any items are needed by the client for specific reasons.
Another area that often needs customization are the payment provisions of a contract. While almost every venue will have a standard provision, if the provisions used do not work for a certain client there is no reason to not try to make changes that will benefit the client. In some cases this means reducing early deposit requirements, and in other cases this means allowing a longer period of time for a client to pay the balance of the fee after the event. In any case, it is only logical to try to reduce risk to a client and allow them to make sure that all of their guests have paid and/or registered for the event before demanding a complete payment, even if that means slightly changing a standard contract term.
These are only a few areas where a contract can be easily changed to eliminate any issues for a particular client. With so many aspects of event planning being susceptible to problems, there is no reason to force a client to unnecessarily deal with a contract that is not the best fit for them. The only thing that can come from not customizing a contract to the needs of the client and event is trouble.
Legal Considerations and Compliance
A multitude of reasons exists for why a venue owner would want to enter into a rental agreement with a person or business: to obtain additional income from underperformed space; to maximize space use and profit, thereby enhancing the owner’s restaurant, hotel or other facility’s profits; and to allow for sponsorship rewards. All of these are sound reasons but, especially where food is served, there are some very important legal considerations.
State and federal laws regulate – and local ordinances and regulations may also apply – to food preparation and service at public venues, including such facilities as banquet rooms, hotels, convention centers, theaters and amphitheaters, auditoriums and stadiums, private clubs, and other facilities that the public rents for special events. With few exceptions, sales of food and beverages are regulated by state law to comply with strict health codes. For example, in California, health food permit licenses are issued by the state’s Department of Public Health (DPH), which grants 14 classes of food facility permits. The businesses that require permits are those "at which food is prepared, handled or stored for sale, or where food is given away or offered for sale." Among the examples are cafeterias, private and public schools, hospitals, nursing homes, health facilities, and retail shops. Local ordinances often add more stringent prohibitions.
Alcoholic beverage licenses are issued by the state Alcoholic Beverage Control (ABC) agencies in most states (referred to by different acronyms in different states). ABC agencies are responsible for regulating companies and individuals in the manufacture, sale and distribution of alcoholic beverages. The ABC license requirements vary from state to state, but there can be no doubt that compliance with ABC laws will be essential if alcohol is to be served.
Event venue owner/operators should understand that responsibility may hinge on the wording in the venue’s rental contract. If, for example, a venue provides the food and/or serves the alcohol, it will be responsible for any violations. Oddly, if a third party provides the food and/or serves the alcohol, the venue may still bear liability if the rental contract does not adequately memorialize who has responsibility for the food and alcohol.
Additionally, liability will extend beyond the venue owner/operator for any injuries or damages relating to the provision of food and/or alcoholic beverages where customers are involved. Where the venue is a restaurant, bar, etc., rather than a convention center that does not usually offer food and beverage service, there is a much greater exposure that courts’ standards in California relating to food and beverage service (the "Cardenas test" established in Cardenas v. Taco Bell Corp. (1994) 25 Cal.App.4th 1482, explained below) will be applied to the entire operation, including the off-premises third party-sponsored event, because of the close nexus between the off-premise event and regular business operations. This increased exposure may even exist notwithstanding that, where an event is catered by a separate vendor, the vendor may be required to indemnify the venue owner and operator.
In addition to obtaining the necessary licenses, permits and certificates required by federal, state and local governments, venue owner/operators should ensure their insurance coverage is appropriate for their needs. Specific events often carry specific coverage requirements. A couple of examples: following are excerpts from a recent case in which a venue operator successfully defended itself against a claim brought by a patron injured at an event:
Bottom line: risks exist that can be managed. When owners and operators carefully negotiate contracts, implement proper procedures, establish appropriate insurance coverage, and engage in regular compliance training, they can and should turn a profit.
Common Mistakes to Avoid
While the issues above are frequently overlooked, my experience tells me that there are other equally important clauses in venue contracts you should address to avoid problems before your event. Please see my notes below, along with the disclaimer that nothing I write here constitutes legal advice and I am, of course, willing and able to further discuss this issue and related topics if you contact me directly.
Parking
If your guests will be using any or all parking facilities on your venue’s property, you should know what the parking protocols are and what happens if an accident or other unfortunate event occurs. Specify whether the venue or its subcontractor will bear responsibility and liability for your guests’ vehicles. You will want to be aware of the undertaking and the limits of liability before you sign the contract with the venue so you can decide whether to terminate the contract or look for alternatives before you become locked into this location. If you have any say in the matter, it is better to negotiate these limitations at this stage than trying to obtain insurance coverage at a later time.
Elevators
If your guests will be using any elevators on your venue’s property, it is good to know what the load limit is. Sometimes, the elevator will have its own staff that runs them and other times, the venue’s staff can call them. The former option is, in my estimation, the better one, but the latter is acceptable. Your guests will want to have priority access to the elevators during the event so you should confirm that they will be able to cut in line, if necessary. It is important to find out as early in the process as possible whether the bottom floor of the elevator lobby is going to be accessible and if so, whether a separate waiting area is required for your guests.
Hotel Room Blocks
Check your contract carefully to ensure the allocation of rooms between single occupancy and double occupancy . If this is not done properly, you may find that you or your guests are responsible for the extra charges incurred by those who require a roommate or two beds for themselves because they were unable to share a room with someone else. In addition, make sure that the cancellation policy fairly balances the needs of you and the hotel.
Deposits and Payment Terms
The deposit schedule should not involve significant interest payments. U.S. courts will enforce provisions that provide for exorbitant interest rates (which can be defined as anything greater than the legal rate of interest). However, court decisions vary and this is an area that is ripe for negotiation. Never accept a contract requiring you to pay the venue its costs of collection (and/or attorneys’ fees) to enforce its rights under the contract. That could make you liable for the entire amount of its attorney’s fee bill, should it attempt to collect. Courts generally require that the losing party pay only a portion of the prevailing party’s attorneys’ fees and costs, not all of it.
Indemnification
Do not submit to an indemnity provision that provides for complete indemnification, or vindication, of the venue in case of a lawsuit, unless you are sure it will not be activated by virtue of anything that you, your guests, agents or employees do, fail to do or even are claimed to have done, failed to do or suggested to have done. Indemnity provisions often are assessed based on a "but for" test. For example, if an indemnified loss would not have occurred but for the action or inaction of your guests, then you are not liable for it. What this means in a practical sense is that you want to limit your indemnity obligation to only those instances where your guests were negligent. Otherwise, you will need to purchase additional insurance, which will, of course, increase your costs and perhaps affect your bottom line.