Learn How To Avoid Liabilities with Amber M. Johns

ImageEvent planners are responsible for a lot of things from design, set up, orchestrating the flow of activities, etcHowever, most of us aren’t lawyers and while it is literally our job to be prepared for anything we can think of, legal issues are ones we may not be quite as prepared for.  That‘s why today‘s guest post comes from Amber M. Johns with Jackson Corporate Law Offices, who is going to discuss how to avoiding liability when crisis hits a corporate event.

It’s January 28, 2014 and you’re in Atlanta on your way to a large scale business event for which you have spent the last two months preparing.  You have accounted for all the details: the venue, catering, entertainment, parking, etc.  Then, all of a sudden, the snow storm hits and like so many other commuters in Atlanta you are stuck in a winter storm grid-lock for hours.  Not only can you not make your event, but neither can the one hundred plus guests who are on their way to your event.  Your cell phone rings uncontrollably and your text and email alerts begin to go off.  As the cancellation and delay messages from the vendors pour in and the venue alerts you that it has to shut down, you wonder to yourself: “Did I prepare for this? Am I going to get paid? Who do I have to pay?”

Liability associated with last minute disasters is a reality that threatens to hinder any and all businesses.  But this concern is particularly acute in corporate event planning where the safety of a large group of individuals is often involved.  As such, it is imperative to know the factors of corporate events that create liabilities and to learn how to minimize risk and increase the safety of clients and event attendees.

Unfortunately, there is no sure way to predict all the liabilities that may occur from business activities, however, with careful planning, a thorough understanding of relevant laws, and a good business attorney, you can successfully navigate the minefield of liability.

The good news is all event disasters have some basic liability issues in common.  Five key preventative tools that can help protect you and your business are: 1) have a detailed, written contractual Agreement; 2) make sure how, when, and to whom payment is to be made is clearly defined in the Agreement; 3) include an Indemnification Clause in the Agreement; 4) include an Insurance Clause in the Agreement; and 5) have a well written Modification and Termination Clause in the Agreement.

The Agreement

The contractual Agreement is the key blueprint that designates each party’s obligations and responsibilities.  It is the fundamental document for all liabilities associated with the event, present and future. It defines all the boundaries of the Agreement such as payment, authority, liability, indemnity and insurance.  When disaster hits, the Agreement is the guideline by which all parties involved operate.  For this reason, it is imperative to pay extra attention to the clauses and obligations detailed in the Agreement.

Many event planners’ make the mistake of executing an agreement without doing the necessary research or without employing a business attorney.  At the time, securing the contract seems like the most important task.  But it is important to remember that the liability associated with a badly written agreement can incur a much higher cost than the compensation received for the services rendered, especially when an unforeseen disaster occurs.  Particularly in the event planning industry where change is the only constant, allocation of the liabilities associated with change should be the first priority.  The initial expense invested into a solid agreement will be far more valuable to the future success and sustainability of your business than one hastily executed bad agreement or worse no agreement at all.

Compensation

The goal of any agreement for any event is to get paid.  As such, this is the heart of your business and assuring you get paid should be a central focus.  In a snow storm disaster, where your event is cancelled due to no fault of any particular party, money has still been spent in preparation, guests have bought tickets, and everyone will want to be paid for their efforts.

There is payment due to you for your services and there is the payment due to vendors and/or subcontractors hired for the event.  If your business subcontracts vendors for any event, then your business will be liable to pay the vendors according the compensation provision of the agreement.  In a disaster snow storm scenario, you may not be paid in a timely manner but you are still liable to pay the vendors.

Even in a situation where your business acts as a third party intermediary, that only initiates the agreement between the client and vendor(s), there is potential liability.  Such liability is directly related to the language in the contractual agreement between your business and the client and even the language in the agreement between the client and the vendor(s).

Because the compensation language in an agreement will determine who gets paid, when they get paid and under what circumstances, it is a pivotal clause of the agreement. This is where the aid of a business attorney can be essential, an attorney can add the necessary language to make the responsibilities of payment clear to all parties and an attorney can execute release forms for the vendor(s) which can further reduce your liability.

Indemnification Clause

Indemnification clauses specify the obligation of one party to defend another party in a suit that arises out of the agreement between the two parties.  They can be unilateral or bilateral, meaning one party would only have to defend the second, or both parties have to defend each other.  In a disaster situation like a snow storm, it is likely that someone will be unhappy with how they are compensated.  In order to protect your business you want a detailed indemnification clause in your agreement.

The nature of the indemnification is determined by the language in an indemnification clause, meaning it is up to the parties to stipulate under what circumstances, to what extent, and with what limitation, if any, indemnification will provided.  Because events are volatile by nature and there is always the possibility of change, it is imperative that a detailed indemnification clause is included in any event contract.  Again, a good business attorney can layout the different options and provide an indemnification clause that will adequately protect your business.

Insurance Clause

Adequate insurance is security.  Insurance is key to defending against “mayhem,” and no business should operate without it.  Snow storms qualify as mayhem and the right insurance will cover your business for all associated costs.  Because the types of insurance, the need for specific insurance, and the requirements to provide insurance are multifaceted and vary, adequate time should be spent on detailing what insurance is required and which party is responsible for providing it.  Failing to identify necessary insurance or even insurance that should be included can be detrimental to all parties involved and it can incur costs that far exceed any potential profit from the event.

Modification and Termination

Modification and termination clauses are often overlooked, but in an industry as volatile and affected by disaster as event planning, they are very important.  In the event of a major modification or termination how is payment affected?  Are licensing and services costs already spent reimbursed? If so, by whom?  The liabilities associated with a modification and/or termination can be large and they affect all parties involved.  As such, the allocation of the potential liabilities needs to be clearly stated in the agreement, not only between your company and the client, but also the client and the vendor(s).  Accounting for the worse case scenarios will limit the liabilities associated and it protects all parties involved.  Thus, a well written and detailed modification and termination clause needs to be included in any event agreement and the best way to procure satisfactory clauses is to employ a business attorney who is familiar with the requisite language.

The above considerations are not catch all guidelines.  Each business and each event is unique, but it does highlight major issues and illustrates the types of legal concerns that should be considered before executing an event agreement.  In doing so, when the snow storm hits, instead of feeling hopeless and lost, you can sit back and enjoy the snow, knowing that your agreement adequately addresses the situation.

For further information please contact Amber M. Johns, J.D. at ajohns@jacksoncounsel.com.

For questions about event planning, Chicago or working with The Chicago Event Planner Magazine, email thechicagoeventplanner@gmail.com


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