Cancelling an event can happen for any number of reasons….and this post – which showed the 4 quadrants of cancellation - just scratched the surface! Events might be cancelled by EITHER the event host OR the venue – and it is our responsibility to ensure that our negotiated venue contracts address ALL of the quadrants of cancellation.
Although it is numerically out of order (and hurts my logical mind!)….I want to start with QUADRANT #2! Why? This is the ONLY quadrant that you will ALWAYS find in a venue contract.
WHEN THE EVENT HOST WANTS TO CANCEL (Quadrant 2).
In the venue contract, you will find terms and specific language that addresses the course of action to be taken by the venue should the event host want to cancel their event. Now – please understand – venues are absolutely entitled to damages from a cancelled contract! You, the event host, have contractually obligated yourselves. Just as you would expect compensation for the venue cancelling your event, you need to expect to compensate the venue.
However, there are many items that should be considered BEFORE signing the contract that will minimize your contractual obligation. Here are just 3 of my tips for negotiating Quadrant #2 (note this is NOT an exhaustive list!):
Having a series of dates by which a sliding scale of damages is owed by the event host is advantageous, however, the event host must ensure that the timeframes are reasonable for them, AND that the calculation of the damages is not unreasonable. For example, should damages for food & beverage revenue be included 1 year out? In my opinion, NO!
Liquidated damages are an estimated calculation of the loss or damages the venue is likely to incur. Often, the liquidated damages are calculated on 100% of total anticipated revenue. This should NEVER be permitted. If you cancel your event, services have not been rendered. This is the basis of the concept of PROFIT REPLACEMENT. As well, you need to remember that only if you negotiate for MITIGATED DAMAGES is the venue obligated to assist you, the event host, in minimizing your damages.
It is frequent to see the following verbiage in a cancellation clause: “Any cancellation fee for the sole purpose of utilizing another facility and/or city will result in 100% charge of anticipated revenue without respect to the date of cancellation.” WHOA!! This is absurd. Whether an event host cancels in “good faith, bad faith, or for no given reason at all”* the cancellation damages should be the same.
So…did any of these tips cause you to shake your head….or your heart to go pitter patter….or your bank account to quiver just a little – because you’ve left your event/organization/client more financially exposed than necessary? Stay tuned….there is SO much more to learn!
Watch for future posts addressing the other quadrants of cancellation….and for those of you ready to dig deep on other critical clauses, hop on over and register for one of my upcoming 3-hour webinars “Venue Contracts: Navigating the Legalese”…..REGISTER HERE NOW!