Contracts: What You Need to Know

April 1, 2008

FeatureContracts

By Michael Humphrey

Joy Bray knows how to make things fun. Her company, Chi Chi LLC, takes what could be a ho-hum corporate function and gives it style, flavor and zip. She also specializes in corporate and leisure travel – the good life. Her Web site’s logo is a French poodle, so she sometimes refers to herself as Top Dog instead of President. Her demeanor is relaxed, her conversation casual.

Just one thing. Don’t mess with her during contract negotiations. The 16-year veteran of meeting and event planning knows that leaving things to chance is a sure path to regret.

“I get everything in writing,” she says. “It’s business. Maybe they think we look cool, hip, carefree, but that’s how ad agencies look, too. That’s what our clients want their events to be. But it’s still business.”

Along with liability insurance, contracts may very well be the most intimidating aspect of planning, especially for newcomers. Many times the planner receives boilerplate documents from hotels, caterers or transportation companies. In some ways, it may not feel that different from when you rent a car or book your own function space. But there is a difference, Bray says.

“What we’re selling is our knowledge and expertise and our ability to negotiate,” Bray says. “I am definitely negotiating heavily for my client.”

So knowing how to approach the contract is as important as anything else a planner will do. And the good news is that you don’t need to head to law school to get it right. But you do need to know where to go for help, as well as when and how to negotiate.

Here are some pitfalls to avoid as you walk through the jungle of contracts:

Pitfall 1: Not protecting your own interests

For Bray, contracts begin with simple statements. She calls them “handshake
e-mail agreements,” simple reviews of what has been discussed on the phone or face-to-face, asking for confirmation that the terms are clear. Contracts, in their most basic sense, solidify clear communication between multiple parties.

“We’re all on the same page, that’s important,” she says. “When you get it in writing and read it, we start out on common ground from the beginning.”

But here’s something new planners sometimes don’t factor in, especially if they are doing events for friends or acquaintances. The first contract in any process should be between planners and their clients.

Bray says she will receive calls from corporate employees who’ve been trying to handle an aspect of planning in-house, only to find they are in over their heads. They seek her consultation or perhaps a little hands-on help. This is a pitfall for professional planners, she says, if you’re not clear from the outset.

“You’ve got to be up front with them, in a cordial way, of course,” she says, “and just let them know, ‘If you want advice and help, my understanding is that you want to hire us to handle this event for you.’ They need to have that clarity.”

Pitfall 2: Making assumptions

Perhaps the reason contracts were first drafted was due to the human foible of assuming too much. You might think because a venue really wants your business that they are willing to accommodate something you deem obvious. What if they can’t? What if they generally don’t?

A contract from any supplier is first and foremost drafted for the supplier’s benefit. If you are going to do the best for your client, says Columbia-based planner Kenneth Steiner, owner of Steiner Associates, you better be clear about what they need.

“I’ll add notes to the contract, negotiated with the hotel, of course, that stipulate specific items that my clients need,” he says. “I don’t leave those needs to chance or verbal agreements.”

Bray agrees, saying that she includes addendums to the vast majority of her contracts. They may be negotiated add-ons, which are discussed further down, or they may be limiting exposure for the client. Either way, don’t assume that you can come back to the supplier after the contract is in place and make changes.

“If you have a good relationship with the supplier, and you’ve done business with them before and will again, there’s going to be some give and take,” Bray says. “But you can’t assume that’s the case.”

Another assumption to avoid is that all contracts are alike. They are not, Bray says.

“Every supplier has a very different kind of contract and different items to negotiate over,” she says.

Pitfall 3: Going it alone

Don’t go it alone. That means two things, Steiner and Bray say – one, don’t rely on just one supplier to give you bids, and two, don’t expect yourself to know everything that’s involved in a contract from day one.

Anybody who has planned a meeting or event in which professional suppliers are involved knows the jargon can get overwhelming. When you factor in legalese, it’s no wonder some of us go a little pale before all the fine print.

The point, Bray says, is to never dive in unaware. When she gets a contract from a supplier, she forwards it on to her clients’ legal department. When the client doesn’t have legal counsel – and she is concerned or unsure about certain language – she seeks the input of a lawyer friend.

“If somebody is unsure of what they are reading, they should seek advice,” she says. “For me, I feel I have the experience so I know what to look for in these contracts.”

It may cost you a little in the beginning to hire a lawyer to look over a contract. But as you gain experience, you’ll need counsel less and less. And it will never cost you as much as getting soaked because you didn’t understand parts of the contract.

Once you become comfortable with the documents themselves, you will feel more able to negotiate the best deal for your client.

Pitfall 4: Not delivering on promises

Remember that negotiations are a two-way street. If you promise more than you deliver, in terms of room nights for a hotel or place settings for a catered event, your chances of getting a good deal next time will shrink.

“I don’t inflate the numbers in order to get a better deal,” Steiner says. “I know in the long run, it’s not going to help.”

It’s about more than reputation. Promising more room nights than you can deliver, for example, will cost you. So will changing numbers on a caterer after the agreed grace period. Sometimes this can’t be avoided. And when those times arrive, it sure helps if you have negotiated in good faith.

Pitfall 5: Asking for too little or too much

“What is negotiable?” asks the Conference Planning Guide provided by the U.S. Department of Justice for its meeting planners. “Everything – but you must negotiate from a position of knowledge.”

The guide continues:

* Know what you want to buy.

* Know what is a competitive price for what you want.

* Know what your budget will permit.

“Keep in mind, too, that negotiations should be viewed as a collaborative effort among professionals,” the guide says. “Neither party should regard their relationship with the other as adversarial.”

Steiner says the point is to understand both perspectives. Your client needs the best possible deal – you already know that. But suppliers need to make profits to stay in business and you should keep that in mind as well.

“I used to see it only one way, from the planner’s side of things,” Steiner says. “Then I married someone from the hotel side and I saw everything that they have to go through to make it work. That made me a better negotiator.”

Staff rooms, gratuity agreements, pre- and post-conference rates, food and beverage rates, added amenities – these are all good places to start. Standard rates generally are not.

“They’re probably working on the margin to begin with,” Steiner says. “I ask for bonuses, extras, because that’s generally where there’s flexibility.”

Bray says, whatever you do, adhering to a standard of professionalism will assure you can negotiate contracts successfully.

“My best advice for people new in the industry is to get a mentor,” she says. “Meet with them monthly and let them help you better understand the industry. Nothing will help you more.”  MM&E

(Michael Humphrey is the Contributing Editor from Kansas City, Mo.)

Resources

The Convention Industry Council offers an excellent free “webinar” on contracts at its Accepted Practices Exchange Web site:

www.conventionindustry.org/apex/apex_learningtools.htm

The Department of Justice’s Conference Planning Guide offers an excellent overview, including glossaries and sound advice on contracts:

www.ojp.usdoj.gov/ovc/publications/infores/res/confguid/negot.htm

About the author

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