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Contracts! An Overview
Contracts don't have to be intimidating - 
The responsibility of negotiating and approving or recommending approval of contracts is usually one of the most intimidating for many event planners and coordinators to approach! But, similar to budgeting, once you get over the hurdle of the unknown and become comfortable with the process and the terms used in contracts for the hospitality industry, you will find them to be valuable and even comforting tools.
Yes, contracts set boundaries that you must stay within, but they also protect you -
Contracts should never be one-sided, so the goal throughout the negotiating process is to make sure both parties are satisfied that the final agreement is fair and mutually beneficial. This is easier to achieve if you approach contacts at facilities, venues and vendor companies as though they are to become your partners rather than adversaries. Only the written word will prevail, however, if there is ever a dispute about terms in a contract. The person you negotiate with may have a very different recollection than yours of a verbal agreement or may no longer be available to verify verbal clarifications or changes when questions arise. Get verbal quotes, agreements or changes of any significance confirmed in writing! It’s just good business sense.
The process may be complex, but it does not have to be difficult -
It will be easier if you have been methodical and thorough in your research and have acquired an outline of booking policies from the various properties and service providers you are considering. Equally as important is being well informed about what your group brings to the negotiating table and where you have flexibility. Once the contract is finalized, refer to it often as you move through the event planning process to keep agreements fresh in your mind. This will be especially important if a significant change to your program is being considered.
Contractual negotiations are evolving with the speed of light -
Due to the unknowns we are experiencing in the current economy, contractual negotiations and obligations are in a state of turmoil. New contracts include new clauses and greater accountability. It will take a trained eye to spot subtle changes or unexpected terms, so contractual reviews should include a team member or senior officer who has significant experience. The terms of contracts already finalized for future events remain binding but may need to be reviewed again if there has been a change of ownership or bankruptcy, etc. Contracts can be renegotiated, but it is critical that renegotiations be handled with utmost care beyond the customary levels of the past. Now more than ever it is important to work diligently toward building and strengthening trusting relationships with venues, vendors and service providers through reasonable and fair business practices and conduct.
Attrition Clause -
You will encounter an "attrition" policy in contracts for sleeping rooms, golf tournaments, group bookings for airline seats, exhibit space ... you name it. , although it may not be identified as such. It may be called a "minimum" indicating the amount of revenue that must be generated by a group without penalty. Using food and beverage as an example, you will be held responsible for paying a certain amount of the food and beverage you "guarantee" for a planned meal function regardless of how many guests are actually served. If the revenue your guarantee represents is less than the minimum stated in your F&B contract, your group will have to pay the difference. If more people are served than you guarantee, you will be charged for the total number served.
There will usually be a sliding scale included in the contract which allows you to reduce your risk of attrition penalty based on how soon you notify the venue, facility or vendor that your numbers will be less than expected, but that can be months in advance of your event date. Flag those dates! Monitor your registration for any type of function very closely add a contingency line item to your budget to cover penalties in case your event does not materialize in number as you hoped. Be cautious. It is better to be extremely conservative in your numbers unless you have solid history from earlier events that documents the trends within your group. Attrition penalties are not going to go away, so you need to understand them and know how to monitor them successfully.
Sample contracts available in links below will introduce you to the basic clauses you can expect to find in contracts pertaining to meeting and event planning. Negotiating tips and Do's and Don'ts when signing a contract are provided, too.
NOTE -
Planning Helper does not provide legal services of any kind.
Consult your own legal advisors before entering into any contractual agreement.