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Force-Majeure Clauses: Out of Sync with Natural Disasters?

Planners should look more carefully at the fine print and consider changing some terms, says industry attorney Joshua Grimes.

The wildfires that decimated the resort town of Lahaina on the Hawaiian island of Maui have brought to the fore an important question for meeting and incentive-program planners:

Is an event contract’s force-majeure clause written in a way that allows the best decision to be made about whether to hold an event after a natural disaster in a destination?

Joshua Grimes, Esq., president of Philadelphia-based Grimes Law Offices, LLC, says that it’s commonly written into meeting contracts that either party has 10 days after a natural disaster or other “act of God” incident to invoke force majeure and cancel an event. However, the case of the Maui wildfires exposes the flaw in that contract term: “Most planners can't make a decision whether to move ahead with a meeting” so soon after an incident happens because too much is still unknown at that point. “If you're the event planner—or the host hotel, which can also invoke force majeure—you would have to do so” within the next few days, he notes.

Grimes makes a critical point about typical force-majeure clauses: “Where did 10 days come from? It’s something that hotel lawyers came up with. But there's no magic to 10 days; it’s simply an attempt to cut things off so that you need to tell the hotel quickly” of the group’s decision.

However, with the resorts in other popular Maui destinations—Wailea, Kaanapali, and Kapalua—all unscathed by the wildfires but facing infrastructure issues related to wildfire damage and also hosting relief workers, it’s not possible for a planner or hotel to know whether holding a meeting there would be, according to a typical force-majeure clause, “illegal, impossible, or impracticable,” say, three months after this natural disaster.

What Are the Alternatives?
In general, Grimes suggests that planners not simply accept the typical force-majeure clause found in hotel contracts; “everything is a negotiation,” he notes. Instead, try to include in the event contract “a clause that would allow either party to make a more-informed decision about whether it could perform" in the wake of a natural disaster.

For instance, “for a planner who might have to make a go or no-go decision 90 days out because that's when attendees are starting to buy plane tickets and finalize arrangements, then that could be the time frame” used as the deadline for either party to invoke force majeure. A broader possibility, says Grimes, is that “the clause could say that either party is able to declare force majeure when either arrives at a decision that it would be illegal, impossible, or commercially inadvisable or impractical for that party to perform” under the contract. The potential downside for the meeting group: “For a hotel, [that date] is probably much closer in” because the hotel has no travel costs to account for, he notes.

Maui Strong Fund: Find out more about helping wildfire relief efforts in Maui

Grimes stresses that proactive negotiation is the key to planners getting a force-majeure clause that makes sense for a given event in a given destination. “I have some clients who basically write their contracts with hotels and other venues, but I also have clients who get almost no concessions” because they simply use the contract the hotel provides. “If you choose to sign a contract where the hotel creates all the clauses in its favor—which is the garden-variety contract hotels propose these days—then that's on you,” Grimes says.

On the other hand, “in my experience the venue and the group reach an accommodation [on various negotiated terms] 95 percent of the time,” he adds. “And in the five percent of times when they can't come to an agreement, then they go their separate ways for that particular event. But most contracts these days are the result of compromise.”

For planners who choose to revisit the terms of the force-majeure clauses in their event contracts, that thought should be encouraging.

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