A Guide to Event Agreements: Key Components and Tips for Success

What Is an Event Agreement?

A common question that many event organizers come across is "What is an event agreement?" An event agreement is a contract between the parties organizing the event and those performing services at the event which outlines the expectations of the event as well as the services to be provided. These contracts can take many different forms, but generally all event agreements cover the same substantive provisions.
There are many parties involved in events and event agreements can be entered into between any one or more of those parties. The first kind of event agreement is between the event organizers and the venue where the event takes place . This kind of agreement generally defines the terms of the rental or license of the venue to host an event. Another type of event agreement is between the event organizer and the performers, vendors and service providers performing at the event. This can include agreements between the event organizer and any of the following: Headlining acts; Co-headlining acts; Opening acts; Supporting acts; Speakers; Vendors of food, beverage or retail items; Vendors of audio visual equipment; Lighting vendors; Photographers; Videographers; Security personnel; Medical personnel; Infrastructure providers; Hospitality providers; and/or Other artist, agency and performance-related organizations.

Key Provisions of an Event Agreement

Whether you are the company presenting at an event or the producer of the event, there is no denying that there are any number of moving parts to the typical arrangement. Therefore, no matter what role you take in the agreement, you should make sure these key clauses are included in the agreement.
Scope of Services: Do not presume that the agreement adequately describes the services. Rather, it is strongly advised to include as much detail as possible. If you are producing an event, make every effort to catalogue all the services and fees in one schedule (making use of a checklist may be a good idea). If you are participating in an event, make sure you know what services are being provided and negotiate the potential clauses that may limit your participation.
Payment Terms: While it is very common to set up payment terms on set dates, including interim payments is often preferable (and do not be afraid to ask for payment on signing and/or 50% payment prior to the event). Both sides tend to have significantly more cash flow leading up to the event date than after the event finishes, plus it allows the producer to have more funds to pay any deposits to third parties.
Cancellation Clause / Deposits: While there are occasions when it is recognized that a client may need to cancel its attendance from a conference or similar event, there are equally occasions when a cancellation can be a severe problem. If there is a massive exhibition opening or a seminar you are desperate to attend, do not just presume the agreement with the event producer will address the situation. For example, if you booked a booth, paid a deposit, and the event is now cancelled. While the producer may have a clause allowing the deposit to be forfeited (many professional event producers do not require deposits), it is very common to have the monies returned to you if the event is cancelled. However, it is less common to refund the money if you cancel. Therefore, be ready to argue for a refund depending on your client’s need to cancel and what you are asking for.
Liability Clauses: This may not be considered critical, but it is highly recommended that you include it (ironically, this clause is often missed in corporate agreements). If you can, make sure to include it because should a lawsuit result from a claim (you will cross your fingers that never happens) it tends to be the first clause that is looked into.
Indemnity: This may seem like a fairly innocuous term but is widely used and often overlooked. While it normally refers to claims made against the producer of an event, it provides protection in two ways to the producer: the event producer is reimbursed for any sum it pays to a third party (including legal expenses), and it refrains from becoming involved in a dispute between your organization and a third party.

Tips for Negotiating an Event Agreement

Once the outline of a possible deal has been established between the parties, a draft agreement is typically presented to the hotel or venue to memorialize the deal. When negotiating the terms and conditions of an event agreement, there are a number of strategies that you can employ to help ensure a favorable deal. These include the following:
Early in the process it is important to determine the overall budget for the event. This would necessarily include all expenses associated with transportation, lodging, food and beverage, perhaps even staffing, and determine whether there is a profit or loss associated with the event. This will then help establish what clauses would need to be modified in order to meet such a budget. For example, if there is a risk of substantial food and beverage minimum charges, which can easily exceed the number of attendees, the food and beverage minimums may need to be reduced or the terms by which the room block is released upon a change in attendance number, if the minimum is not met, re-evaluated. Also, while such clauses allow the planner and hotel to plan around a given number of attendees, very few attendees will actually reduce an event by 10 to 20% in any event – particularly when food and beverage minimums are used. That said, the hotel may also seek an assurance that food and beverage costs not only be reduced but capped in case such increased attendance occurs. While this certainly makes for tough negotiations, it is an important element to consider in case attendance is higher than expected. The next clause to negotiate involves attrition. The contracted terms are designed to protect the hotel from having events that are not met, and thus behalf of the hotel, allows it some recourse in light of a cancellation of an event. Conversely, the negotiation must also allow the planner to have an out with respect to such a cancellation, particularly when there is no cap on food and beverage, or the actual attendance at the event is significantly lower than what is expected. For instance, the planner should be allowed to cancel an event without penalty if the attendance is not met within five (5) days of the event. In contrast, the hotel should be able to charge the planner for attrition in some manner based on the size of the event. Perhaps the hotel could charge $500 or $1000 for a cancellation or attrition of ten people or less for a small event consisting of 50 to 75 people, $2,500 for a mid-sized event, and so on. However, attrition charges equal to the total amount of the contract should be considered a deal breaker. With respect to liability it is essential that you, as the planning group, limit your liability for the performance of the agreement. Consider whether the standard insurance clauses are adequate given the full scope of the event, and whether you are allowed to indemnify the hotel for matters outside of your control. Also, see if you can include a pre-negotiated liquidated damage provision to the extent you are liable for negligence, again to allow yourself an exit strategy if an unexpected loss occurs.

Common Mistakes to Avoid When Drafting an Event Agreement

Frequently, individuals and organizations enter into event agreements without having a solid grasp of their legal rights and obligations. Doing so is like signing a contract to buy a house without understanding the terms and obligations therein.
A few of the more common pitfalls include: The safe conclusion to reach is that event organizers should never sign those terms without receiving legal advice. Many planners will tell you that they have tried to negotiate some of the far reaching terms of a hotel agreement to no avail. Here’s something to keep in mind when you do your next deal – NEVER SIGN A CONTRACT THAT HAS UNILATERAL TERMS IN FAVOR OF THE OTHER PARTY. If you do, you are simply taking a huge risk.
Sometimes it is inevitable that an organizer will be forced to accept a lot of the hotel’s terms. Hotels almost never agree to any substantive changes to their liability, indemnification or intellectual property terms. That is why it is important to understand what your rights are under the law and how the hotel’s terms impact those rights. If you don’t know that, then you won’t be able to make an informed decision on whether to take a term as-is, ask for a modification or to walk away from a deal. If you don’t ask the question, you won’t get the answer. A lot of hotels and convention centers do not charge for wireless internet, especially if it is for a single event. Even if that is not the case, see if you can "bundle" the wifi into other event services that are being performed by a general services contractor, such as audiovisual services, shipping / receiving and decorator services. As a cost saving measure, it is beneficial if you consolidate your services and expenses with a general services contractor. In other words, put your eggs all in one basket.
The biggest pitfall is not putting anything in writing. You can be in the middle of the event and realize that you really need a service, such as onsite registration and housing, but there are no terms to protect you. Getting those services added to your agreement then takes considerable time and HRMC / DMC / GSC markup. You also risk being assessed late charges by the hotel for not providing timely notice of the change in the scope of services. You should ensure that your agreement contains a clause requiring the parties to put all changes to the agreement in writing before such changes become effective. The bottom line is that event agreements are designed to protect the interests of the hotel, convention center, DMC or GSC with whom the client is working. If you don’t take steps to proactively protect yourself, you may be left holding the bag when things don’t go as planned.

Key Legal Concepts to Consider When Forming an Event Agreement

There are a number of hot-button legal issues worth considering when adding provisions to an event contract. How these clauses are drafted could lead to potential risks for your company.
Many events today require security, parking, ticketing, insurance, transportation, and catering. These provisions should be detailed in the agreement and should outline clearly each party’s obligations for these services. Third party vendors should be approved by your company’s event planner. If you are responsible for planners, be sure to review their contracts to ensure that they’re following the same best practices.
In recent years, event planners have included clauses that include force majeure, waiver of subrogation, and indemnification provisions. The purpose of these clauses is to limit your liability for the acts of others, especially those that might arise out of a natural disaster such as an earthquake, fire, vandalism, terrorism and other circumstances beyond your control . The waiver of subrogation means that the other party waives its right to recover damages from a party or parties whose negligence has caused a loss. The indemnification clause requires that the party at fault compensate the injured party for its losses relating to the event. This is also when you should consider including or excluding parties – everyone involved in the planning, production, and performance of the event. The parties covered should include, but not be limited to, vendors, suppliers, entertainers, and musicians. You will want to assess who will be responsible for the acts of whom. Your company will want the broadest and safest language possible – indemnifying all of the above. But don’t forget the parties potentially indemnified. From their perspective, they will also want the narrowest definition possible!

Amending or Terminating Your Event Agreement

There may be times, despite your best planning and intentions, when you need to modify or terminate an event agreement. In crafting an event agreement, it is important for the parties to anticipate such a possibility because the manner and process for modifying or terminating an event agreement can vary greatly depending upon the parties’ intentions. While the decision to modify or terminate an agreement may stem from a number of different reasons, a common cause for modifications and terminations is when either party (or both parties) face unexpected circumstances that make it substantially more difficult to fulfill its roles under the agreement. Depending upon the nature of the parties involved in the event, this may be referred to as force majeure, act of God, inclement weather, fire, etc. In either situation, whether it be a modification or termination, it is important to follow the process set forth in the event agreement, if any. For example, an agreement may set forth a procedure for written notice to the other party. Other form terms may set a condition precedent for a proposed termination or modification. Also, modification/termination provisions typically require the consultation and confirmation of the other party. These are just some examples of terms that you should look out for when attempting to modify/terminate an event agreement. If you follow the proper procedure for modification or termination in accordance with the terms of the event agreement or you have successfully negotiated modified termination terms, you should always ensure that the modification or termination is memorialized in accordance with the terms of the event agreement. Generally, this takes the form of a letter from the party seeking modification or termination to the other party. If you are the recipient of the modification or termination, it is always wise to consider confirming the modifications or termination in a return letter. Many times an event agreement will set substantial limitations on the liability of any party in connection with the performance of the agreement. However, the provisions for termination or modification can be subject to certain exceptions, such as obtaining the consent of the other party. It is important to understand the implications of terminating or modifying an event agreement and to follow the necessary procedures and protocols to ensure that the modification or termination is properly effectuated.

Examples of Good Event Agreements

One of the best ways to understand the impact of various clauses in your event agreement is to think about them in the context of real events.
A company wanting to host a sales conference for its global sales team hired an event service company to create a three-day experience. After conducting a site visit with the service company at a hotel the team selected, the service company sent a ten-page contract to the company for its signature. The contract included one paragraph requiring the hotel to pay the company twenty-five thousand dollars ($25,000) if the company cancelled the event after the contract was signed or if the hotel was unable to host the event because of a pandemic. Concerned that the business would change in the future, the company countered to try to delete the clause. When the hotel declined to limit liability, the company moved the event to another area hotel. The company was shocked when it learned the city was still in the midst of the COVID-19 pandemic which caused the occupancy levels at the new venue to reach a meager fourteen percent (14%). The company ultimately cancelled the event. Fortunately, the company’s new terms with the second hotel were not as strict as the first because the cancellation clause allowed the company to be reimbursed for some of the money the company had already paid. Not unexpected, the hotel did not have to pay anything to the company because no new guests showed up at the second venue. In another example, a Fortune 500 company paid an event service company to create a virtual experience which included a series of online content and relationship-building activities for its global sales team . The contract between the company and the event service company included a force majeure clause requiring the service company to refund the company five million dollars ($5,000,000) if the event could not be held in the event of a war, terrorism, riot, insurrection, flooding, fire pandemic, epidemic, or earthquake. At the day of the event, the event service company sent the company an invoice for twenty-five million dollars ($25,000,000), fifty percent (50%) of the cost of the virtual experience and required prepayment. The company refused to pay because, among other reasons, the event was being held virtually, the company guessed that the event was being made cheaper because of the virtual format, the company was not going to travel anywhere to participate in the event, and the Fifteen-Million-Dollar ($15,000,000) force majeure clause in the contract was far too long in number—in fact, the clause was so long that at some point it became incomprehensible and redundant. The event service company would not negotiate the five-million-dollar ($5,000,000) refund clause and took the company to court. In a different type of event, a hotel agreed to host a three-day concert for more than one hundred-thousand square feet of outdoor property. The contract between the company and the hotel contained a large indemnification clause requiring the hotel to defend and indemnify the company for claims arising out of the hotel’s negligence. During the event, several patrons were injured, two seriously, when some of the high value tents that were temporarily erected on the concert grounds collapsed during a spring rainstorm because the hotel failed to stake down the tents. Subsequently, the claims brought by two injured concertgoers against the company were dismissed because the hotel had the exclusive right to erect the tents and the hotel was solely responsible for the safety of the tents at the concert.