Partner, Barnes & Thornburg LLP
Until there is widespread vaccination for Covid-19, it is important for organizations to “map out” their meetings to determine whether each one should proceed in person, what the “go/no go” decision date is for each one, and whether there must be any changes to each event contract.
A frequently asked question is how an organization can protect itself from liability if it holds a meeting and an attendee then contracts the virus. Often the first thought is to have attendees sign a waiver of claims in order to participate. These documents, however, might not be enforceable. Besides that, the optics might not be good—you don’t want to see social-media posts about people “signing my life and my family’s lives away” to attend.
It is important to review your general-liability insurance policies. While these policies typically cover injuries, death, or property damage arising from an organization’s meetings, they might exclude communicable diseases. An event host might not be covered if someone makes a claim alleging they contracted the virus at the meeting.
For the foreseeable future, flexibility is the key to contracting—the ability to adjust the room block, the function space, and the F&B minimum without fees. Focusing on room-block attrition fees is also necessary; they can be less negotiable than the minimum room-block size.
The best way to handle changes to existing contracts is to simply create a new contract. The parties can agree to terminate the existing contract without liability and contract for the new meeting terms and figures. Amendments are not ideal because they sometimes miss key items that must be changed because they no longer synch up to new portions of the contract.
While the clauses in all new contracts should reflect whatever flexibility an organization might need, that does not necessarily mean revising contract clauses in all areas. In particular, there’s often a desire to change force-majeure provisions. However, if the organization already is using a favorable force-majeure provision, no changes should need to be made. Two requirements must be met for a party to exercise their rights under this provision: establish that a cause beyond the parties’ control occurred; and the force-majeure event has rendered a party’s ability to perform the contract illegal, impossible, or commercially impracticable.
For the first requirement, there’s no need to expand the list of possible force-majeure events if the clause includes a catch-all statement: “including, but not limited to” or “or any other cause beyond the parties’ control.” This should cover the parties on items they could not anticipate. Also, do not have the word “unforeseen” or “unforeseeable” in the provision. Just because the organization is signing a contract during the pandemic does not preclude it from later asserting that the pandemic is a force-majeure event.
For the second requirement, note that “illegal” or “impossible” are difficult standards to meet. A term such as “commercially impracticable” is more realistic standard, i.e., failing to get a “critical mass” of attendees to fulfill the meeting’s purpose. The standard could be set at attendees being “materially affected” or “deterred” from traveling rather than “prevented” from traveling.
There are many Covid-specific clauses appearing in new contracts. My concern is that those provisions could narrow the organization’s rights rather than expand them. The force-majeure provision might be broader in scope to not require the organization to jump over many hurdles in order to invoke their rights under that provision.
This content shall not be considered legal advice nor insurance advice. In all cases, groups should consult their legal counsel and insurance providers.