Published on January 1, 2020
As a venue owner, you know that contracts are necessary to hold both parties accountable for the terms and conditions stated. Clearly written contracts, with no surprises, will lead to more seamless events and avoid frustrations on both sides. We've put together a list of items to keep in mind when drafting contracts.
9 provisions to incorporate into your contract
Cancellation and refund policy
This is an integral part of your contract and needs to be as specific as possible. Unfortunately, circumstances can arise that lead to the cancellation of the event either from you or the client. To protect yourself from the client cancelling last minute and you losing money, it is imperative to include specific time-frames for full or partial refunds. A bulleted list for time-frames helps to clearly communicate your terms rather than them being buried within long contract language. Requiring a cancellation in writing gives you proof of the cancellation should it be called into question at a later date.
If you are tacking on administration fees, be clear in your contract what exactly this will cover so there is no confusion. Typically administration fees are for administrative overhead, management of the event, documentation and preparation. If you are not intending to pass this money on to your staff, you will want to include language that states the administrative fee does not cover service charges or gratuity for wait staff and bartenders. This will help ensure your staff does not get stiffed on a tip.
It is important that you outline a payment schedule in your contract so you get paid what is due to you when it is due to you. This includes the deposit along with final payment amounts and dates they should be paid by.
Finance charges and late fees
Make sure you include information about clients who do not pay within the terms outlined in the contract will be subject to a late fee or monthly finance charge. Include the amount of the late fee or the finance charge. Before you set this charge, it is important to know if your state restricts the amount you can impose in late fees per year.
Restrictions and limitations
Defining restrictions and limitations in your contract will protect your venue from damage and hazardous activity. Points to consider are: spaces that are off-limits to attendees; types of décor that are not permitted; where décor cannot be placed; designated smoking areas; and limitations including when the music should end and what time everyone (including clean up crews) should vacate the premises.
Everyone hopes for a smooth event, but unexpected damage can occur. To safeguard you in these instances, you will want to have written language stating your policy for payment for repairs and collection of payment. You may want to require that your client purchase event liability insurance to protect them financially should damage occur during their event. It may be easier to recoup money for damages from an insurance company, rather than having awkward back and forth conversations with your client.
Exclusive vendors and preferred professionals
Many times clients are confused about exclusive vendors and what this entails. If you require clients to use a specific vendor, such as for catering, be sure to spell out potential costs, as your exclusive caterer may not fit into their budget. In addition, state in your contract if there are any additional fees should the client choose not to use vendors from your preferred professional list.
If you require a minimum amount that needs to be spent on food and beverages for an event, include in your contract the minimum amounts and also the minimum number of guests the client is required to pay for. This helps so you don't lose money on “no shows.”
When you intend to charge for services such as cake cutting, corkage, overtime charges at the end of the night, or other services that a client may not have accounted for, it is best to draw attention to these in your contract so there are no surprises. The more upfront you are about costs, the less likely you will have unsatisfied clients.
As with all things legal, we recommend you consult with a lawyer familiar with your line of business and the contracts that go along with owning a venue. In addition, consider recommending Markel to your clients for event insurance.
Markel offers event liability insurance to hosts and honorees, protecting from incidents such as property damage to the venue or injury to a guest. Up to $2 million in event liability insurance can be purchased by your client from Markel any time at least 1 day before the event. Policies start as low as $75.
By offering event insurance, it will not only protect your clients, but it can also protect you by potentially decreasing your own business liability risk for accidents due to negligence of the event host or honoree. Markel's event insurance is an easy and affordable solution for your clients – a free event insurance quote takes only a few minutes online or on the phone – that will help protect your clients (and you).
Free client materials! We can provide you with free brochures to help raise your clients’ awareness of the benefits of event liability insurance.