As part of our ongoing Ask the Expert program, Elizabeth, a meeting planner based in California submitted the question:
"I’m drafting a hotel contract and want to make sure I’m protected. Can you suggest how to phrase a mutual cancelation clause? What about a review clause?"
To get an answer, we reached out to Jonathan Howe, president and senior and founding partner of Howe & Hutton Ltd. He shared this insight:
"Mutual cancellation clauses simply provide that either party may cancel upon the same terms and conditions and recover whatever the fee might be for cancellation. Avoid the term 'penalty' because only courts can impose a penalty. Rather, you would state that that cancellation fee is not a penalty but rather the fee is a reasonable estimate on the part of the parties as to what those costs would be.
"As to a review clause, I suggest that you set forth a schedule to review with the hotel as to room demand. Instead of stating how many rooms you can delete, it will state how many rooms or percentage of rooms you can increase as you go through the schedule and vice versa as to any decrease in the room block.
"In all such cases, you should consult with your attorney or an experienced attorney to prepare the appropriate documentation."
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