Let’s face it. No one thought 2020 was going to start off with a pandemic that confined most of us to our homes for months. In the event industry, we’ve been cancelling and postponing events and putting planning on hold until the future is a little more clear. The world has basically stopped. Were you prepared for this? While most of us didn’t know COVID-19 specifically was going to be an issue, some of us had prepared for an “Act of God,” while others were totally taken by surprise.
We can’t stress enough how important it is to have a solid contract. You want to trust and believe that if everything goes haywire, people will just do "the right thing.” But, what's the right thing when it comes to your contracts? Do you charge a fee for rescheduling? What happens to the existing payment schedules? It’s time to decide what’s right for you and your business and get it in writing. Here are some of the most important clauses you can have to protect yourself in situations like a pandemic:
1. The Act of God Clause
If you don’t have a force majeure clause in your contract, stop here and go add one. In my opinion, it’s one of the most important clauses you can possibly have. As a planner who reads a ton of vendor contracts for my clients, I'd say that I need to request that an Act of God clause be added to the agreement 70% of the time. That's way too often! While it’s a clause you hope you never have to use, when you do, you'll be grateful that it’s there. So, call your lawyer and invest in yourself to have the clause done properly and in a way that protects you and your business. Keep in mind that it’s important to both define what qualifies as an Act of God, but also what your response will be when it happens. Some questions to consider:
- Will you allow clients to reschedule? If so, is there a time limit on how far out that they can reschedule? For example, is it okay if they pick a wedding date that’s three years in the future?
- Will there be any additional fees when they reschedule? Will the fees apply only to events scheduled beyond a certain time frame? Keep in mind that you need to protect your company against inflation, future payroll increases, etc. and think about the “what-ifs.” Most companies charge a 15-25% fee for rescheduling.
- What happens if you’re not available on the new date your client chooses?
- What happens to the current payment schedule?
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2. Payment Terms
As any successful business owner knows, it’s important to have revenue coming in every month. So, most companies will already have strong payment schedules and clauses that break up the payments based on when you need cash flow. Let’s say you have all of your final payments due one month before each event. What happens when all of these events are postponed? You now have deferred revenue and a lapse in cash flow.
3. Working Conditions
I think it goes without saying, but you're only as good as your team. Without them, you cannot produce successful events. But even if you’re a team of one, it’s important to think about your working conditions. Do you have a clause in your contract that defines where you'll work and what happens if the conditions of an event aren’t something you feel comfortable with? Applying this to COVID-19, if you have an underlying condition or you’re pregnant, are you going to feel comfortable working a wedding in the immediate future? Would you be in breach of contract if you refused to work the wedding? This is another clause to have your lawyer look at and make sure you’re protected in case the environment isn’t safe (as defined by you), even if it’s not an Act of God.
We all have a lot more time now then we typically would during prime wedding season months. While it'd be easy to mope and mourn what could've been, now's the time for improving ourselves and our businesses to make sure we’re ready for 2021. This starts with strong contracts! Put in the time now to be stronger going forward.
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