What is a Venue Agreement?
A venue agreement is a written legal contract between an event planner or producer and a venue. It defines the responsibilities of each party with regard to the actual use of the space as well as the services promised by the venue, such as food service, beverages, audiovisual equipment, and staff. Venue agreements also include the price to be paid for services and other details specific to the event .
While the scope of a venue agreement may vary based on the type of event being produced, what does not vary is the need for an agreement to define the terms of the relationship. If there is no agreement, there is no expectation that one party or the other is delivering on services promised. It is a disservice to the client/vendor/venue to not have a clear contract with each party outlining responsibilities.
Five Elements of Venue Agreements
When negotiating a venue agreement, consider the following elements that are typically included in such contracts:
DATE AND TIME OF FUNCTION: Most rental contracts specifically set forth the time at which the rental begins and ends. Be aware that "set up" and "break down" times may not be covered by the rental contract. Consider whether additional time is needed for set up and break down.
RENTAL TERMS: The rental fee may be paid in installments. Ask the venue why a portion of the fee may be paid before the event date and consider whether such pre-payment is reasonable.
ATTENDANCE: It is common for the rental contract to include an anticipated number of guests. It may also include the size of the room that the landlord believes is required for your function. If the size of your event is larger than originally planned, revisiting the contract terms can be tricky.
CANCELLATION: If you cancel the event, how much notice do you need to give the landlord in order to get your deposit back? Keep in mind that it is common for landlords to seek out events that pay a higher fee at the last minute, when they find out a regularly-booked event has been cancelled. On the other hand, if you are forced to postpone or cancel the event for some reason, such as an emergency, will you be the priority if another customer has offered a higher rental fee for the same day? What is the process for re-scheduling?
Negotiating a Venue Agreement
When it comes time to negotiate a venue agreement, both the venue and the event planner should have a clear idea of their goals and objectives to ensure that negotiations are productive. Several strategies can help to achieve successful negotiations that are fair to both parties.
The first strategy is to make sure each party understands its needs and requirements for the event. This includes the number of guests, the type of food and beverage service required, the set-up and take-down procedures, and any additional elements that will contribute to the success of the event. A clear understanding of the needs and wants of the event will help both parties identify the important elements to be included in the agreement.
Another key strategy is to prioritize objectives. Both the venue and the event planner should identify which elements are vital to the success of the event, and which elements they may be willing to compromise on in order to reach an agreement. Having this top-of-mind will help each party be focused on the most important elements during the entire negotiation.
A third strategy involves having a range of acceptable terms. Instead of only offering a single, non-negotiable term to the other party, it may be more effective to have a range of acceptable terms. For example, instead of simply stating, "we cannot pay more than $X," the statement could be modified to read, "we can pay $X, but if you can offer another perk in exchange, we can pay slightly more." This statement engages the other party in negotiations and offers multiple solutions that can satisfy both parties.
Finally, mitigate potential negatives by being upfront and honest about issues that could threaten negotiations. Every good negotiator understands that issues can arise that could lead to a breakdown of negotiations. By being upfront about the potential issues and how they could impact negotiations, each party can work to address the issue before it leads to a breakdown in communication.
Using these negotiation strategies will help both the venue and event planner achieve successful negotiations that lead to a venue agreement that is fair to both parties.
Top Legal Issues in Venue Agreements
One of the biggest mistakes that clients and attorneys alike make in negotiating venue agreements is underestimating the complexity of these arrangements. Most suppliers and customers are not accustomed to the level of granularity which tends to be required in defining the respective roles and responsibilities of the parties in the context of a venue where two or more different parties will collaborate on any number of stages of the process, from planning to construction, and from operation to decommissioning.
For example, what happens if, during construction, a contractor is conducting field operations in an area where the customer has specified that no access is to be permitted? If the contractor establishes that it couldn’t have known such an area was off-limits, the contractor will typically have a strong argument that it is acting within the scope of its responsibilities to the extent it was proceeding without the customer’s explicit instruction to stop performing. Arguably, that should be enough to find that this sort of issue cannot be a fault of the contractor, who may be able to demand that the customer or another party bear the liability for remediation or injuries associated with the then-completed work. In addition, venue agreements typically require customers to provide clear notice of on-site hazards that must be avoided. It will be a very high bar to argue that the customer can find fault with the contractor’s work when the contractor has not been explicitly informed of all site hazards.
There are additional, technical reasons why liability may be a more difficult question to resolve than in some other contexts. For example, if the venue work consists of installation of equipment involving items that are commercially available , if that material has been installed in accordance with the seller or manufacturer’s operational guidelines and instructions, a party injured as a result of an alleged defect in the material would almost certainly find it difficult to pin 100 percent of the blame on the contractors responsible for installation, as the supplier or manufacturer would bear an equal portion of any liabilities associated with a defect in the underlying product.
All of these issues should be carefully considered, and account should also be taken of relevant insurance requirements when structuring the deal. If any party is going to handle hazardous materials or otherwise face many risks, those potential liabilities should be fully accounted for. Often, suppliers or customers will want to avoid having to pay premiums on insurance for which the counterparty is already paying. Depending on the deal, if there is overlap in coverage, there is a risk that claims made against the customer and claims made against the supplier will "eat" into the same minimal policy limits, to the detriment of each party. One way to prevent double-dipping is by amendments to the insurance policies requiring all claimants to weigh in on what portion of their insurance payments they will apply to any given incident. That way, if two policyholders have overlapping liability for an incident that caused $1 million in damages, and each policy has a $1 million cap on coverage, rather than split decisions on how to spend those $1 million, both can agree on devoting $500,000 in coverage to the incident at hand, releasing the other half for future claims. There are some legal issues associated with these types of claims administration provisions, but the mechanics can be useful in limiting exposure. Consideration should also be given to whether there are specific limitations on coverage amounts in certain insurance policies.
Tips for Reviewing Venue Agreements
When reviewing a venue agreement prior to signing, there are certain items the event planner that should look for to ensure that your client is protected. Most venues will provide a one-page Banquet Event Order ("BEO") detailing the services requested, menu selections and room arrangements. This BEO is not an agreement – it is only meant to review what services will be provided at the event. However, it is unusual for there to also be a one-page agreement. While most venues have standard form agreements, they may contain custom provisions and clauses that the event planner should carefully consider.
Room Fees
Some venues will charge a "room rental" fee. This is often charged regardless of the amount of food and beverage the client may purchase. Before agreeing to such a fee, consider whether the client may be better served by charging for the food and beverage actually consumed. The more people, and the higher the cost for food and beverage, the harder it will be for a venue to claim that no room fee should be charged. It is best to have this fee in writing.
Limitations of Liability
Often clients are shocked to find language in a venue contract that limits the liability for damages or losses to the amount of the contract fee. In some cases the venue provides no liability whatsoever for damages to person or property. Venues should be willing to negotiate this language – at least to add some reasonable limitation. This is particularly important if the venue owner is using a third-party for catering and the client is considering serving alcohol at the event.
Insurance
Almost every venue will require the client to have insurance. However, venues can be unreasonable with the types and amounts of insurance, so do not just sign what the venue provides without shopping for comparable rates with another broker. First and foremost, there is a real difference in coverage when alcoholic beverages are served, as opposed to only serving soft drinks. The risk factors are significantly higher when people are consuming alcohol. One can probably purchase an alcohol-related policy from the General Liability Insurance provider for a few hundred dollars; however, the cost might be prohibitive if additional coverage is added beyond alcohol.
Consider whether the venue requires a Certificate of Insurance showing the owner as "additional insured." This may not be necessary if the owner already has substantial insurance.
Establish the termination rights of the parties. The client should have the right to terminate the agreement without penalty for reasons such as change of venue, etc. In the event the venue is cancelled, there is usually a penalty or a cancellation fee. The client should attempt to limit the amount of the penalty to the deposit.
If time is of concern, consider shortening the date by which the venue can terminate. After all, venues usually have no contract until eight weeks or so prior to the event. But the client should give the venue enough time to schedule another event. Find out whether the venue allows the client to move the date of the event one time for a minimal fee. For the cost of a few hundred dollars, the venue may agree to allow the date or location to change without incurring the penalties associated with cancelling the entire contract. This is often well worth it, particularly for high profile events.
When reviewing a venue agreement, look for these items and negotiate or discuss with the venue owner those items that are no longer acceptable or desired. Make sure the venue owner agrees to the changes in writing before signing!
Templates and Tools for Venue Agreements
In addition to the resources mentioned above, there are various templates and other documents available that can assist individuals in drafting or understanding their venue agreement. Websites such as Rocket Lawyer and Template Lab provide a wealth of information from explanatory articles to downloadable resources. Royal Legal Solutions provides similar services, with agreements broken down into several categories, including master client retainer agreements (to define longstanding working relationships), a direct payment agreement (whereby a professional collects payment on behalf of an independent contractor), and an indefeasible terminable contract (to allow both parties to easily terminate their agreement) . Model documents are also available through public websites, such as one provided by the National Association for Catering and Events that provides basic elements of an agreement. Consulting a review website, such as Law District, that outlines venue agreement templates could also be useful. By using these resources as a guide and providing your provider the details of your arrangement, you may have better luck receiving a draft agreement that aligns with your expectations.