Addressing Legislative Developments in Event Contracts
By Barbara F. Dunn O’ Neal Esq
You don’t have to look too far nowadays to hear about a state or local community adopting a law or regulation which has the effect of discriminating against a subset of the population due to a person’s race, sex, sexual preference, gender identity, or other protected class. No matter which side of the issue you are on, there’s one thing that we all can understand and appreciate: meetings mean business – economic business that is. Groups looking for a location to hold their meeting or event are consumers – they “speak” with their action or inaction. If they want to show support for a location, they will hold a meeting in that location. That was the case post-Hurricane Katrina in New Orleans. If they want to show they do not support a location, they will not hold a meeting in that location or will cancel a meeting previously contracted for the location. That has been the case with North Carolina where groups began withdrawing from meetings and special events or choosing not to go to North Carolina because of the state’s so-called “bathroom bill”.
Let’s be clear: this is a business issue, not a legal issue. If a group is contracted to hold a meeting in a location that later enacts legislation which has a discriminatory impact on a certain subset of people, absent a provision in the contract to the contrary, the group is legally obligated to perform to the contract and canceling the contract will result in cancellation fees. Many groups have found themselves in this situation of having to reach out to the hotels or the bureau in that area in an effort to negotiate a peaceful withdrawal from the contract with the hope that a change to the legislation will be coming. When legislative change does occur, the understanding is that the group provided relief will again consider holding its meeting in such city.
My recommendation to groups is to address this issue up front. If these types of laws are of a concern to the group and/ or its members, the group should let possible locations know that if they want the group’s business, they will have to ensure that all contracts for the event include the right for the group to cancel the contract without liability. While that may “sting” for cities, it is an essential part of the group selecting that location and even though there may not be any issues at the time of contracting, the potential exists that between the time the contract is signed and the time of the meeting, such legislation may be passed in that location. While I understand that it is not the hospitality community members’ “fault” that such legislation is in effect, that hotel, restaurant or venue has the ability to influence legislation in that state.
As noted above, I recommend to groups that they include language in their contracts which permits cancellation without liability for these reasons. I do not recommend rolling that right into the force majeure provision. It is not a force majeure event. Rather, I recommend treating this as a business issue as noted above.
At the end of the day, if a state was to pass such legislation and it would be going into effect 30 days prior to the event, the group may not have any other option than to hold its meeting in that location. As such, the group still has the opportunity to work with the facility as well as state and local officials to ensure all measures are taken to minimize the impact this legislation has on the event.
In all cases, organizations should include in their crisis management plan situations in which the state or local authority in the meeting location adopts any laws or regulations which could be viewed as discriminatory or otherwise controversial in nature. This would include both practical measures of managing the risk as well as communications plans and strategies. As is the case in many other situations, keeping the mindset of hoping for the best but planning for the worst is critical.
corporate law for nonprofit organizations as well as meetings, travel and hospitality law. She can be reached directly at (312) 214-4837 or barbara. firstname.lastname@example.org. ©Copyright 2017. Barbara Dunn O’Neal, Barnes & Thornburg LLP.