Clause for concern?

It's strange that we will read the small print from top to bottom when we're buying a new vending machine or computer, but we don't give it a second thought when booking a venue for a conference or company event. Considering the total cost may be thousands of pounds, that's an odd attitude.

In these litigious times, all event organisers need to keep an eye on what they're signing. Check out these guidelines, and stay on the right side of the law...

Be aware of what you're getting into. Did you realise, that a verbal contract is as binding as a written one? In law, a contract has simply three parts: an offer, an acceptance and "consideration" - an agreed remuneration. The Spiny Stickleback Country House Hotel says it can give you 20 rooms at £95 each on April 27th. That's the offer and consideration. You telephone them to agree. There's the acceptance. And hey presto! you have a contract. Nobody has signed anything, but you and the hotel have swung into a legal relationship.

The ideal is to have a written contract, but here, too, you must be careful. Misunderstandings often occur when words are used loosely. You need to make sure you're speaking the same language. And here it's both parties who can be on shaky ground. Booking "up to 50 rooms" is not specific enough. You wouldn't order "up to 10" printers, would you?

Specify everything - is the breakfast included in the room rate a Continental or full breakfast? Does the conference package include a day's car parking for delegates? Can the delegates use the spa and gym facilities free of charge? If everything is discussed up-front, there's less risk of misunderstanding later.

When your contract arrives for signing, dig out the venue's Terms & Conditions, and read them carefully. Signing the contract means you agree to them, so you'd better know what you're signing up to! The Terms & Conditions are where a venue sets out how it does business - its payment schedule, cancellation policy, insurance, etc - and you ignore them at your peril.

Read in particular the hotel's cancellation policy. Just because you represent a global organisation with impressive buying power, you won't necessarily get away without paying a cancellation fee if you change your mind about an event. Remember, it's a legal relationship and the venue has every right to pursue its compensation.

In law, the venue has the right to claim only for the loss of profit - not the full loss of revenue from an event's cancellation. So if you cancel a dinner for 100 people at £40 a head, the hotel cannot ask you for £4,000 at any time - the highest figure is more likely to be 65% of that, which is an average hotel mark-up on the food cost.

The familiar 'sliding scale' cancellation policy means that pulling out two months before your event may mean you pay 50%, and doing so two days before, may cost you 100%. This is based on the increasing difficulty a venue has in selling your meeting, catering and bedroom facilities, as time shortens. A sliding scale is based on the principle that this represents a pre-estimate of the likelihood of a hotel reselling the space. At the time an event is cancelled, this provides certainty as to what the cancellation fee will be. However, a hotel can then go on to re-let your space and legally achieve more revenue from that period than if your event had gone ahead in the first place!

A 'model' set of Terms and Conditions from the Meetings Industry Association in the UK provides a fairer scenario for all. In this contract - used by a growing number of hotel and venue groups - the client must commit to 90% of the event at the time of confirmation (which focuses the client's mind and stops casual bookings), but if a hotel re-sells cancelled meetings facilities to the same value, the client pays nothing. The hotel has to prove that it made every effort to mitigate its loss - in other words, it has tried hard to re-sell your meeting rooms, catering space and bedrooms. Beware, in the worst cases, unscrupulous venues have taken the client's cancellation fee AND re-sold the conference space, which is neither fair nor legal.

Look out for Exemption Clauses in a hotel's or venue's Terms & Conditions. A venue may try to limit or exclude its liability, even if a problem is their fault. So, if caterers employed by the hotel are late or not up to standard, the hotel can distance itself from the deal. Take no chances, and delete the clause before signing.

Another one to look for is Damage Indemnity. Venues may ask for indemnities against damage caused during your event. Never sign away 'unlimited damages' - it's a blank cheque. Agree a limit beforehand.

A growing trend in the US is to have Delivery Service Guarantees. These turn the tables on normal practice, and see clients giving venues THEIR conditions for booking. Clients can specify, for example, that there will be no refurbishment work in the hotel during their conference. Major hotel groups in the UK are now beginning to adopt guarantees, and offer money back if targets are not hit.