You're just about ready to finalize your event agreement with the "ABC Hotel & Resort" after weeks of negotiations and back and forth with both their sales team and their legal team. You and your company have poured over room-block commitments, haggled over attrition rates, gone to the mat over food and beverage pricing. Now you're reviewing the agreement one last time before letting the hotel know it's ready to go in final form and get signed.
But, a stray thought keeps nagging in the back of your mind -- it seems like there's some important language, some key terms and conditions that you're just not seeing in the text of your contract. You can't quite put your finger on it, though. What is it your contract is missing? You find yourself thinking back to the last monthly meeting of your local meeting planners association, where a featured speaker talked about essential terms that should be in all of your contracts. What was that phrase they used -- representations and warranties? Promises to perform? Was that it?
Representations and warranties! You go back over your contract and, with the exception of the hotel stating they will provide the rooms, meeting space and pricing on the dates you're contracted for, you don't see any other language where they commit to do or provide anything. At this point, then, what essential representations and warranties should they be making to you for your event?
What basic representations and warranties/covenants to perform/performance guarantees -- call them what you will -- should the hotel be providing to you in your contract? Following are the key ones you'll need, and we'll highlight as well which ones you should definitely not "make mutual" by agreeing to them yourself.
1. Compliance With Laws
At a minimum, the hotel should represent and warrant that it and all hotel-related activities occurring on its premises have complied and will comply with all applicable laws, rules and regulations including all health, fire, safety and building codes and rules. Particularly for hotels and other resorts, these applicable laws should also include compliance with the Federal Hotel and Motel Fire Safety Act of 1990 (United States Public Law 101-391), requiring that each sleeping room in the hotel has a dedicated smoke detector and automatic sprinkler system.
Ensure that the hotel also includes language in this representation that all of the hotel facilities and rooms shall be kept in a neat, orderly and hygienic state in order to provide a safe and secure environment for all guests, as these are requirements that are also set by relevant federal, state and local laws. If the hotel wants to make this representation mutual, limit your representation to just those laws applicable to the transactions contemplated under your event agreement.
2. Provision of Utilities
You might think this is an obvious requirement for any activity or event scheduled at a hotel or resort, but ensuring that the hotel covenants to provide the necessary electricity and other power and utilities required to successfully run an event without additional charges to you prevents the property from claiming that any special displays or features during your event (e.g., a special, very flashy light-up wall) aren't covered in their standard provision of utilities to guests.
3. Confidentiality and Protection of Personally Identifiable Information
In this age of data breaches, General Data Protection Regulations, California Consumer Privacy Acts and a host of other data-protection regimes, the representation and warranty to maintain/protect data privacy and confidentiality is a critical one. To begin with, the hotel needs to represent and warrant that it will protect, not disclose to anyone and keep confidential any and all personally identifiable information, including but not limited to credit card information and any other identifiable information (e.g., Social Security numbers, phone numbers, personal emails, etc.) of all of the attendees coming to your event.
Beyond this basic requirement, however, the hotel also should warrant that it already has a documented security program in place that describes in detail what the physical and logical controls used by the hotel to protect PII in electronic or paper form actually are. In addition, the hotel (or its third parties) needs to include language in their representation that they are and will continue to be compliant with applicable government (e.g., US-SOX, GLB, HIPPA, GDPR, Canada-PIPEDA, etc.) and industry (e.g., PCI-DSS, ISO 27001) standards and regulations when handling or storing PII.
Important tip: Do not simply let the hotel warrant that they are in compliance with their own corporate privacy directives or policies, as these directives/policies may, themselves, not be in full compliance with the government and industry standards referenced above.
Beyond the data-privacy protection, you may also want the hotel to represent and warrant that it will also keep confidential and not disclose the contents of the event agreement you have signed with it, in case the agreement contains terms that you may not want to be publicly disclosed.
4. Quiet Enjoyment and No Construction
Certainly, a key component to the success of your event is that your attendees will be able to enjoy it without distracting noises, sounds or obstructions that prevent them from freely moving around the hotel’s premises. For this reason, you should also include in your event agreement the following closely-related representations and warranties:
A) A representation by the hotel that it will be responsible for ensuring your attendees' use of all hotel event and meeting spaces are free from outside distractions, disturbances and interruptions. It’s best to include specific steps the hotel will take to ensure this warranty is fulfilled like:
- Walls shall be sound-proofed.
- If they are not, the hotel shall avoid assigning to any meeting spaces adjacent to or across from your event any other group or meeting which may generate noise loud enough to detract from or interfere with your event's functions.
- The hotel shall leave at least one unoccupied room between your group and such other group as a buffer to eliminate the risk of disturbance.
If your event or your attendees' use of any function space is disturbed despite these efforts, then the representation should include language that the hotel shall promptly respond to any notice from your attendees about the disturbance and diligently work to ensure such disturbance stops.
B) A representation and warranty by the hotel that it will not undertake any major construction, renovation or remodeling on their premises during your event. Further, the representation should include language to the effect that the hotel shall give at least six months prior written notification to you of any planned renovation or construction that might interfere with your event or, as important, the guest-room block you've negotiated in your event agreement.
If it turns out the hotel does have upcoming renovations that may potentially interfere with your event or constrict your room block, you need to ensure terms are included in the warranty that the hotel will provide you with equal alternative space within the hotel. This will help to minimize the adverse impact the renovations may potentially have on the event if they are unavoidable or were scheduled prior to the execution of your event agreement.
You can further protect yourself by including language that you have the right to terminate the event agreement for cause at any time without penalty, liability or additional cost to you if the hotel fails to provide you with the required prior written notification of the construction or renovations and/or fails to make alternative arrangements. Further, you should ensure that language is included that, in the event you do terminate the event agreement as a result of the construction or renovations and have to relocate to a different venue, the hotel shall pay those commercially reasonable costs associated with any changes to printed marketing materials you may have purchased for the event that reference the hotel.
5. Compliance With the ADA
The representation and warranty governing compliance by the Hotel in all respects with the public accommodation requirements of the Americans With Disabilities Act is at least as critical as the warranty covering data privacy and protection. The ADA is, in fact, fairly specific in its requirements for public accommodations to disabled individuals, and would cover the hotel's responsibility for the following:
- The "readily achievable" removal of physical barriers to access meeting rooms, sleeping rooms and common areas.
- The provision of auxiliary aids and services, where necessary, to ensure that none of your disabled attendees is treated differently by the Hotel or other individuals (e.g., hotel employees, agents, representatives, etc.).
- The modification of the hotel's policies and procedures applicable to all of your event attendees and/or other groups as necessary to provide goods and services to disabled individuals.
To the extent the hotel tries to make this ADA compliance warranty mutual in the event agreement, you should generally not agree to do anything more than the following:
- The reasonable and "readily achievable" removal of any physical barriers within the meeting rooms which you create and utilize for your event and which are not are not controlled or required by the hotel.
- The reasonable provisions of auxiliary aids and services to all of your attendees and, where necessary, effective communication of your event’s program to your disabled attendees.
- The reasonable modification of your event's policies, practices and procedures as required to allow your disabled attendees to participate equally in the event.
An important part of the process of complying with the terms of the ADA beyond what is spelled out in the representation and warranty in the event agreement, though, is you taking the initiative to identify and notify the hotel, in writing and in advance, of any of your disabled attendees', speakers' or guests' special needs which will require accommodations by the hotel.
For its part, the hotel should also provide you with advance written notification of any requests for special accommodations for your disabled attendees which the hotel may receive, other than from you, in order to assist you in ensuring your event complies with its ADA compliance obligations. Further, while the ADA only applies to agreements signed in the U.S., you should ensure a representation similar to this one is included as a hotel obligation for agreements and events occurring outside of the U.S.
6. Maintenance of Adequate Insurance
Despite all the planning you have done for your event and despite all the precautions the hotel may take to ensure no mishaps or negligence occurs on their premises, sometimes accidents do happen or parties behave carelessly. In those situations, it is critical that your event agreement contains the appropriation language addressing the insurance policies and coverage maintained by the hotel for just these types of situations. At a minimum and in keeping with general industry standards, the hotel should maintain the following minimum policy coverages:
- Worker's compensation as prescribed by the laws of the jurisdiction in which the work takes place and employer's liability insurance (with a minimum of $1 million per occurrence coverage).
- Commercial general liability and/or third-party public liability insurance, including premises, operations and contractual liability coverage (with a minimum of $1 million per occurrence coverage).
- Employee dishonesty liability coverage (with a minimum of $1 million per occurrence coverage).
- Comprehensive automobile liability insurance including liability and physical damage coverage, if applicable, for owned, non-owned, or hired vehicles or watercraft (with a minimum of $1million per occurrence coverage).
- Host liquor liability insurance (with a minimum of $1 million per occurrence coverage) if not covered by the hotel's commercial general liability insurance.
- Any other insurance the hotel is required by law to maintain.
The hotel should further warrant that any subcontractors hired to perform services on behalf of Hotel will also agree to maintain the same coverages listed above. If a given subcontractor can’t or won’t comply with these policy coverages, then you should ensure the representation includes language that the hotel must send you written notification for your prior written approval as to whether you accept the subcontractor’s refusal to abide by the policy limits.
Finally, make certain there’s language in the hotel's insurance warranty naming your company and, if applicable, your affiliates, officers, directors, and employees as additional insured parties on the commercial general liability and auto liability insurance policies noted above as well as language requiring you to receive copies of all applicable policies from the hotel, for the duration of the event (move-in to move out).
In the event the hotel cancels or fails to renew the policies or in the event there are any material changes to the policies either prior to or during your event, ensure the Hotel warrants they will notify you immediately in writing. All of the policy coverages should also contain a waiver of subrogation clause on your behalf.
7. Authorized Signatories
The representation and warranty that each of the parties to an Agreement actually has the authority so sign on behalf of the company or entity they represent is often overlooked, though the lack of such a warranty can have serious consequences if it turns out one of the parties wasn't authorized to sign. The representation itself is important because the mutual execution of the agreement by the parties is what brings it into legal force and effect. The substance of the representation is fairly simple and usually contains language along the following lines:
Each person signing this agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this agreement. Each party represents and warrants to the other that the execution and delivery of the agreement and the performance of such party’s obligations hereunder have been duly authorized and that the agreement is a valid and legal agreement binding on such party and enforceable in accordance with its terms.
With the inclusion of this warranty, both parties to the event agreement can rely on and enforce the terms of the agreement based on their rights and obligations contained within it. Further, in the event a party was not duly authorized to sign, the other party to the agreement can bring an action for material breach against the unauthorized party.
The representations and warranties outlined in this article represent the basic ones you should have in all of your event agreements. In those cases where you may have additional or specialized terms and conditions, given the nature of the event you're planning (e.g., a provision or exchange of intellectual property between the parties), you should ensure that you include the appropriate additional representations and warranties to cover those terms. In this way, you'll have the security of knowing that the "promises, promises" you've been given are legally enforceable ones and you are protecting your company.
William Bruce Cox is vice president of business development and general counsel for Cox Event Consultations Services, LLC.