The Importance Of Reliable Contracts In Event Management
Contracts form an integral part in any business relationship, including in event management. Whether you are planning your own wedding, arranging a sporting event, or are organising a corporate event, all parties need to know where they stand.
Participants, guests, speakers, and organisers benefit from having watertight contracts in place. In an ideal world, all parties would abide by any agreement and meet agreed targets.
However, in reality, there are delays. Unexpected events can lead to an increase in budgetary demands and other unforeseen changes to service delivery. Such changes, as well as the potential impact of those changes, are covered by service contracts.
Any contract needs to include details of the scope of services that will be offered to you.
- What will the other party be providing?
- How and when will they provide it?
- Will they be using outside contractors?
- Who is responsible for managing them?
The scope of the service offered sets out expectations, and it needs to be as precise as possible, while still allowing some room for movement where required.
An inaccurate or incomplete scope of services can lead to disagreement and lawsuits. You should also include details of what will not be included, and every contract must be targeted to the specific service provider.
Agreeing exactly what services are provided, and which are not, means that everybody knows what is required and by whom. It enables you to quickly determine the services being provided. You can also use this information to ensure that you have every element of the event covered.
No matter how carefully an event is planned, cancellations can still happen. Sometimes, the organiser needs to cancel or rearrange, while service providers may also need to cancel. Having a cancellation policy in place enables you to set out and agree to cancellation terms.
- What will happen with any deposit or upfront payment?
- Will a service provider be entitled to partial payment for the work completed so far?
- Is there a deadline, after which parties cannot cancel?
As well as payment and cancellation terms, you should set out what is and what is not considered a viable reason for cancellation.
- Will the event be cancelled if there is not enough attendance?
- Or if there is a lack of funding?
Cancelling an event is never easy but having proper cancellation policies in place makes it easier and ensures that all parties understand what will happen. Use solicitors to ensure that the contracts are watertight to protect you, your business, and your partners.
Payments And Schedule
All payment details need to be included in any service agreement. This will set out how much will be paid, when it will be paid, and even how it will be paid. The contract can include details on what action should be taken if the budget needs to be increased, especially in the case of unforeseen circumstances.
Some budgets will be fixed, while others may be more fluid, but you can still include best estimates in the contract, and include details of how, and even when, the budget can be renegotiated.
- Will any of the fee be paid up front?
- When will milestone payments be made?
- How much will any outsourced services cost?
Payment is obviously one of the most contentious issues during disputes. Service providers want to be paid the money they feel they are owed, while the client needs clarity and budget certainty for any event. Including precise budget details negates any disputes that might arise.
Indemnity clauses are essential in event planning. If a third party fails to meet a deadline, and you are ultimately left out of pocket as a result, the indemnity clause will determine who is ultimately responsible for meeting any additional costs.
Similarly, the event planner will usually have a contract in place with the organiser, and this should include an indemnity clause as well. If a contractor fails to meet their obligations, an indemnity cause sets out what action they must take and it essentially means that the supplier is contractually obligated to meet any losses that arise as a result of this failure.
Indemnity clauses are standard, but they are an incredibly important part of a service level agreement and should not be left out.
Your contract needs to include provision for unforeseen circumstances, and the so-called force majeure clause offers you a means of defence and clear instructions on what will happen in this case. If there is a fire at the event location, or if there is a natural disaster in the area, the termination clause clearly sets out who is responsible for what, whether any payments are still due to be made, and it sets out the next steps for all parties that are included in the agreement.
- Who can cancel services and terminate the contract?
- Under what conditions is termination considered acceptable?
- What will happen, on contract termination, to any payments and schedules?
Contracts are an essential component of business. They help ensure that things run smoothly and, if there is a problem, they set out what action can and should be taken. A failure by any party to meet the terms of the contract can lead to legal action and lawsuits.
One of the most recent examples of this was the breach of contract by G4S during the 2012 Olympics in London. G4S had been contracted to provide security for the event, but the government was forced to draft in 3,500 troops to meet the shortfall when the company informed them, just two weeks before the Olympics was due to start, that they did not have the staff to cover security requirements.
Eventually, G4S said that it lost £88m on the contract. This included a £48m payment to cover the cost of drafting in the armed forces – without a watertight supplier contract in place, the event organiser may have been faced with this financial hit themselves, serving to highlight the importance of service provider contracts.
About The Author
Rick Marsh is content writer and outreacher for Garratts Solicitors, who offer a host of personal and business legal services. Whether you need professionally drawn up service contracts for your event, or a service provider has failed to meet the terms of an agreement, get in touch with Garratts to see how they can help.