Supplemental Materials - Are You Ready? Disaster Prep for Meeting, Convention, and Trade Show Professionals

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SUPPLEMENTAL MATERIAL
DISASTER PREP 101:
MEETING PROFESSIONALS SURVIVAL
KIT
By Marlene Blas & George G. Fenich
© FENICH & BLAS FOR DMAI MARCH 2013

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EXAMPLE
SNOWSTORM CHICAGO
• A winter meeting is being held in a warm climate.
Thirty percent of the attendees are scheduled to fly
from the Midwest. Chicago O'Hare airport closes
due to a snowstorm. The meeting sponsor should
be able to partially terminate its obligations and not
be held responsible for performance guarantees for
the 30 percent of attendees unable to travel to the
meeting. Unless the contract provides for total
termination in this circumstance, the meeting
sponsor is still responsible for holding the meeting
with the other 70 percent of the attendees that can
travel. Both parties must agree to the percentages.

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EXAMPLE
HURRICANE
• A hurricane is forecast at the destination the group intends on
visiting. Some people brave the elements, others choose to stay
home. Is the group subject to attrition penalties for partial
performance?
• Solution: Force majeure indicates a situation that is beyond the
control of either party involved. Be sure your force majeure
clause includes a grocery list of calamities covered, such as
weather, terror, war, “or any other event beyond the party’s
control,” Dunn said. There should be some language that
protects the group in the case where the “standard of impact
makes travel inadvisable, impractical or commercially
impracticable.” When negotiating the contract, try to get the
property to waive attrition for partial performance in such cases
of partial performance, emphasizing that some business is
better than none at all.

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EXAMPLE
IMPRACTIBILITY
• If a meeting is being arranged for the purpose
of global team-building and events transpire
that make it impossible for employees from
abroad to attend, the purpose of the meeting
has been frustrated. If this purpose is not
expressly outlined in the hotel contract in a
“purpose of meeting” clause, you may be out
of luck when trying to avoid attrition or
cancellation fees.

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EXAMPLE
PARTIAL TERMINATION
• If the clause is written as Foster suggests, a client
wouldn’t be held responsible for 100% of performance in
the case where 30% of attendees are prevented from
traveling to the Caribbean for a meeting due to a
snowstorm at home that closed the airport. In such a case,
“the sponsor should be able to partially terminate its
obligations and not be held responsible for performance
guarantees for the 30% of attendees unable to travel to the
meeting. Unless the contract provides for total termination
in this circumstance, the meeting sponsor is still
responsible for holding the meeting with the other 70% of
the attendees that could travel. Of course, both parties
must agree to the percentages in advance.”

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EXAMPLE
GOVERNMENT EMPLOYEES
• Hotel-drafted provision says that the reason for
termination must be an “emergency.” As one
association learned the hard way, the definition
of “emergency” depends on who's doing the
defining. The group canceled a meeting because
attendees — all government employees — were
obligated to attend a government-sponsored
event, the date of which was moved, creating a
conflict with the association's meeting. In
upholding an award of $275,000 for the hotel, an
appeals court said, in part, that the situation was
not an “emergency” of the type contemplated in
the contract.

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EXAMPLE
GULF WAR FEAR OF TRAVEL
• An example of a case where the force majeure argument
failed, and the hotel prevailed in obtaining a judgment
requiring the meeting sponsor to pay lost profits for an
unexcused cancellation, is found in 1200 Scottsdale Road
General Partners v. Kuhn Farm Machinery, Inc., 909 P.2d
408 (Ariz. App. 1995). There, a large corporate meeting,
scheduled for the Phoenix area, was cancelled when,
during the Gulf War in February 1991, the sponsor of the
conference concluded that participants would not fly to
Phoenix to attend. However, the court rejected the
argument, holding that, merely because some of the
expected attendees would not fly to Phoenix due to Gulf
War anxiety, the conference was not rendered impossible
or even impractical. The conference simply might not be
as successful or as large as the sponsors had hoped.

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EXAMPLE
LACK OF INTEREST IN CONCERT
• The recent U.S. case of Outrigger v SFX is an excellent example of this. In
that case, the claimant contracted to host a music conference for the
defendants and held some 3,000 hotel rooms for them. In early 2002, the
defendants sought to terminate the contract because they had received
insufficient bookings. They tried to rely on the force majeure clause in the
contract and argued that ‘the events of September 11 coupled with the
fragile condition of the U.S. and international consumer economies’
constituted force majeure events.
• The force majeure clause in the contract defined a force majeure event as
one that made performance ‘inadvisable, illegal or impossible.’ Whilst the
parties agreed that the terrorist attacks of September 11 were an event of
force majeure, the claimant contended that they did not make the contract
‘inadvisable’. The court gave much thought to what ‘inadvisable’ meant.
The judge(s) looked at case law on force majeure that held that non-
performance dictated by economic hardship is not enough to fall within a
force majeure provision. The court concluded that:
• ‘From an economic standpoint, it was certainly unwise, or economically
inadvisable, for Defendants to continue with the conference. Nonetheless a
force majeure clause does not excuse performance for economic
inadvisability, even when the economic conditions are the product of a
force majeure event. The force majeure clause does not contain language
that excuses performance on the basis of poor economic conditions.’
266F. Supp. 2d 1214, 5 February 2003.

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SAMPLE FORCE MAJEURE
CLAUSE
• Force Majeure – the parties performance under this agreement
is subject to acts o God, war, government regulation, threats or
acts of terrorism or similar acts, government travel advisories,
disaster, strikes (except those involving the Hotel’s employees
or agents), civil disorder, curtailment of transportation facilities,
or any other cause beyond the parties control,, making it
inadvisable, illegal or impossible to perform their obligations
under the Agreement. Either party may cancel the Agreement
for any one or more such reasons upon written notice to the
other. In the event the Group decides to hold its ‘event’ despite
such circumstance, the Hotel shall waive any fees related to a
reduced-size ‘event’ (including any room attrition fees, function
space rental, food and beverage attrition fees) and shall offer the
guests of the Group any lower room rat offered to guests during
the contract dates
Source: D. Valentine (2009). Force Majeure – planning for the unexpected, Excel Meetings and Events, Google
search on June 20, 2010.

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IMPOSSIBILITY OF
PERFORMANCE
• The performance obligations of a party may be
terminated without liability if the performance has
been made impossible by events outside the
control of the parties occurring after the contract
was made. There are five main types of
impossibility: (1) destruction, deterioration, or
unavailability of the subject matter or tangible
means of performance; (2) failure of the agreed-
upon means of performance or contemplated mode
of delivery or payment; (3) supervening illegality;
(4) failure of the intangible means of performance;
and (5) death or incapacity of a party.
• Source: Foster, J (2005). When bad things happen to good meetings.

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IMPRACTICABILITY OF
PERFORMANCE
• Termination of obligations under a contract may be
granted when performance has been rendered
excessively difficult or harmful by an unforeseen
act or occurrence outside the control of either
party. The Restatement of Contracts 2nd, §261
defines impracticability as follows: "When, after a
contract is made, a party’s performance is made
impracticable without his (or her) fault by the
occurrence of an event, the non-occurrence of
which was a basic assumption on which the
contract was made, his (or her) duty to render that
performance is discharged, unless the language or
the circumstances indicate the contrary."

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FRUSTRATION OF PURPOSE
• In frustration cases, the party seeking discharge is not claiming
that (s)he "cannot" perform, in the sense of inability. Rather,
(s)he is claiming that it makes no sense for him/her to perform,
because what (s)he will get in return does not have the value
expected at the time (s)he entered into the contract. The four
main factors courts have considered in deciding whether to
apply the doctrine of frustration, are: (1) the object of one of the
parties in entering into the contract must be frustrated by a
supervening event; (2) the other party must also have
contracted on basis of the attainment of this object, i.e., it was a
basic assumption common to both parties; (3) the principal
purpose of the contract must be totally frustrated or nearly total;
and (4) the party seeking to use the defense must not have
contributed to the frustrating event or non-occurrence.

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EVENT CANCELLATION
INSURANCE
• INSURANCE TO MITIGATE RISK
• KNOWN AS ‘BUSINESS INTERRUPTION
INSURANCE’ IN OTHER INDUSTRIES
• WHETHER TO INVEST IN IT DEPENDS UPON
HOW IMPORTANT THE MEETING/EVENT IS
– Board Meeting for 65 probably not worth it
– Annual event for 3,000 probably is
• PREMIUM SET ON CASE-BY-CASE BASIS
– About $1 to $5 per $100 of exposure

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TRAVEL INSURANCE
• CAN COVER GROUPS AS WELL AS INDIVIDUALS
• CAN COVER
– ILLNESS
– LOST BAGGAGE
– BANKRUPT TOUR OPERATOR
– MEDICAL / DENTAL EMERGENCIES
– MEDICAL EVACUATION
– OTHER TRAVEL INTERRUPTIONS
• COST = APP. 10% OF THE TRIP COST
• IN NORTH CAROLINA, LICENSE IS REQUIRED TO
SELL TRAVEL INSURANCE
– COMMISSION = 29% TO 40%
• INFORMATION PROVIDED BY
– Sherry Fisher | Business Development Manager, US Travel Sales | RBC U.S. Insurance Services Inc. | T. 919-777-0442 | C.
910-551-8837 [sherry.fisher@rbc.com

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WEB SITES THAT TRACK UNION
ACTIVITY
• www.UniteHere.org (Hotel Employees and
Restaurant Employees)
• www.Hotelworkersunited.org IUF.org
(International Union of Food, Agricultural,
Hotel, Restaurant, Catering, Tobacco and
Allied Worker's Association)
• www.ALPA.org (Airline Pilots Association)
www.TWU.org (Transport Workers Union)

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BOOKS
• Foster, J.
– Meeting & Facility Contracts, Meetings & Liability
– Independent Meeting Planners & the Law
• Goldberg, J.M.
– The Meeting Planner's Legal Handbook
• Sorin, D.
– The Special Events Advisor: A Business and Legal Guide for
Event Professionals
• Barth, S.
– Hospitality Law: Managing Legal Issues in the Hospitality
Industry

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ATTORNEYS
• Devlin, Lisa Sommer - Phoenix
• Dunn, Barbara – St. Louis
• Foster, John – Atlanta
• Goldberg, James – Washington DC
• Grimes, Joshua – Washington & Philadelphia
• Howe, Jon - Chicago
• Seeley, James – San Francisco
• Tesdahl, Ben – Washington DC

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GEORGE G. FENICH, PH.D.
• PROFESSOR
• SCHOOL OF
HOSPITALITY
LEADERSHIP
• EAST CAROLINA
UNIVERSITY
• E-MAIL:
fenichg@ecu.edu
• Voice: 252.328.2190
• PRINCIPAL
• FENICH &
ASSOCIATES LLC
• WEBSITE:
fenich.com
• Voice: 252.561.5329
• AUTHOR
– Meetings, Expositions, Events
and Conventions: an
introduction to the industry

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Marlene Blas, MTA, CMP
• Associate Director for
Meetings and Events
• CA Western School of
Law
• E-MAIL:
mblas@cwsl.edu
• Voice: 619.525.1689
• Program Advisor and
Instructor
• California State
University, San
Marcos
• WEBSITE:
http://www.csusm.edu/
el/certificateprograms/
eventplanning/beaplan
ner.html

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