Venue Agreements Explained
A venue agreement contract is a legally binding contract between two parties that generally governs and controls how a specific venue will be used and what will be expected of both parties during that time. It will usually specify whether or not alcohol can be served, how many guests are expected, and what will happen if the date changes or an unexpected occurrence happens.
These contracts may be referred to in a number of ways , including:
Other terms you may come across when talking about venue agreements are venue hosts, venue managers and venue coordinators. There are also two different types of venue contracts. Venue contracts with hosts are between organizations, such as businesses, corporations or non-profit groups, while venue contracts with individuals are typically used for private events such as weddings or birthday parties.
Key Provisions in a Venue Contract
A venue agreement is a contract between an event planner and the venue concerning the rights and responsibilities of each party including the price for the product and services being furnished or performed. In California, a venue agreement for a wedding comes under the category of a written contract required to be entered into by the wedding couple and the person or persons furnishing services to the couple, under Family Code section 16000 et seq., and may also come under the category of a contract for the sale of goods, under Commercial Code section 2301 et seq. When the venue agreement comes under the written contract section of the Family Code, it requires the same disclosures as a written contract between the wedding couple and the person or persons furnishing services to the couple (under Family Code section 1625). However, there is no borrowing of law from the Family Code to the Business & Professions Codes for the requirements under the written contract section of the Family Code.
In addition to the above requirements, the venue agreement should include the date(s), location, cost, and when deposit and final payment are to be made, as well as insurance requirements, and cancellation policies. The cancellation policies (e.g., deposits versus non-refundable deposits if canceled within a certain time frame) and liabilities (perhaps for acts of God) should be spelled out carefully, as with all other terms of the venue agreement.
Negotiating the Terms of a Venue Agreement
A venue agreement necessitates negotiation. Remember the importance of timing and planning; offer adequate notice of changes you seek. With this in mind, do not let your first suggestion be your last.
Commonly-negotiable elements
The following are some of the more common terms upon which you should insist:
Price – when you need your event space, for how long, whether liquor will be served, whether you need audiovisual support and the like, will all affect price.
Flexibility – try to negotiate maximum flexibility with respect to your schedule, since that is likely to change over the course of planning an event. If your date is flexible – that is, you permit the venue some room with respect to the date of your event – you may find some flexibility in price as well.
Additional Services – in many cases, if you are purchasing two or more services from a venue, prices will be lower than if you were purchasing those services separately. Again, however, be flexible – if the price is high, consider alternatives and be prepared to walk away if the price cannot be met or are too high. Also, be aware of which party will be purchasing additional services, because your obligation to pay for such services may extend your liability to an additional vendor.
Of course, none of these terms are exclusive, and advancing the bargaining position with respect to one of them, could affect the others.
Legal Issues and Snags
It is imperative that you read through the legal language of a venue agreement contract with a fine-tooth comb and consider every scenario to avoid potential pitfalls in the future. You want to make sure that the contract truly reflects what you want for your event, because if there is legal language in the venue agreement contract that’s unfavorable to you, and you didn’t take the opportunity to negotiate it before you signed, it’s too late by the time you discover it.
One example might be a limit on the size of the group in the event room. Let’s say you have a wedding for 400 people, and you’ve reserved a block of rooms for them to stay at a hotel. Well, if the venue agreement contract has legal language that states the maximum limit for a gathering in the event space is 300 people, and the contract is non-negotiable, you’re out of luck if your wedding grows to 500 people on the day of the event because the contract might be binding, and you won’t be able to have all your guests at the venue.
Likewise, if you are a showroom or restaurant manager and your corporate office requires you to sign non-negotiable venue contracts, you will need to either address those agreements in advance with the corporate office so you know exactly what you are getting into, or carefully consider them before signing.
In addition to discerning what is legally binding to you , there are certain pitfalls that may come up in a venue agreement contract where you may be asked to agree to unexpected terms or costs that were not discussed when the agreement was entered into. For example, ALA members went on an event at a beautiful venue that we’ve used before. This time the venue was hosting a social function for its employees and their families following the event, so they moved our event out of the main event room and into a smaller space upstairs, at no extra charge to us. However, the venue agreement contract stated that if the sales of the bar exceeded $2,500 in revenue, we would be responsible for all of that revenue, even if we didn’t consume that much in bar. In other words, if we only sold $2,000 in bar items, we would still have been charged the quoted price of $2,500, meaning we would be forced to purchase more than we planned to in the venue contract. Even though the venue moved us to a different room, they still asked us to pay according to the original guest count; thankfully, we had the foresight to negotiate that issue in advance.
Finally, the change or cancellation policy is something that should always be reviewed. Too often I see agreements that do not allow for a deposit to be refunded even if the change or cancellation of the event is due to circumstances beyond the client’s control (for example, bad weather).
Making Your Venue Contract Your Own
As mentioned above, the Venue Agreement is open for negotiation, and you should customize it for your event. You certainly will not have the same needs as someone planning an event at another venue. These different needs extend to the ability to obtain customized clauses offering specific protections for your event.
Take, for example, an event being held at a private mansion or estate. The owner of the property likely is concerned about noise levels and the impact your event could have on neighbors. He or she does not want local authorities ending the party early. If you expect music played outdoors on a patio where the sound levels may be a concern and there is a chance the neighbors will complain, then it is wise to include in your Venue Agreement the right to play music at a certain acceptable sound level and agree to check the sound levels with the local authorities to make sure you understand the local noise ordinances.
If your event is a wedding, and the owner of the venue has no experience hosting wedding events, you also may need to create additional clauses to protect yourself and your guests. For example, if you plan to hire a disco ball rental company along with a DJ, you will need to be sure that your Venue Agreement allows for multiple vendors and provides requirements under which they can work in the venue. You could put a clause in your agreement that states how many vendors you intend to bring and how long each vendor will be set up, where they will be set up and when they can set up.
If you are an event planner and you typically require that the client sign a rental agreement with you in addition to the venue contract, be sure your Venue Agreement includes language that states the venue is not liable for the rental agreement and contract between you and your client. This language will protect you and make you responsible for collecting your rental fees for things such as table, plate and glassware rentals in the event your client fails to pay. A venue will not be responsible for paying those rental companies or the client. You need to have a provision that allows you to make sure the client is contractually obligated to pay you and any outside rental parties directly. You also should include a provision in your Venue Agreement that prevents you from contracting with a client who is already required to pay the venue directly for specific items required by the Venue Agreement, such as floral arrangements, catering, decorations, or other things.
It is important to make sure the Venue Agreement includes language that protects your deposits and payments from cancellation. If you require a down payment or deposit or receive payment directly, it is important for you to include language in your Venue Agreement that states if the event is cancelled by the client, an insurance rider is required to pay for the client’s cancellation fees for the venue. You can even state that you will provide a copy of your invoice for the venue to the client’s insurance company so the client does not have to come out of pocket for those expenses.
It is equally important to include this language in a Venue Agreement when you are the venue and you require clients to provide you with certificates of insurance naming you as an additional insured and also requiring that the certificate of insurance include a rider for the payment of your fees in the event of a cancellation.
Your customized Venue Agreement should cover as many issues as possible so you are protected.
Checklist for Reviewing Venue Contracts
When you receive a contract, pay special attention to the following included terms:
1. Make Sure You Have Included Everything You Were Promised.
Sometimes negotiations proceed verbally (instead of via e-mail or in writing) and the Venue Manager may not include everything you were verbally promised. Also, if you send the Venue Manager a list of items you were promised in your contract negotiations and he or she promises you those items in writing, ask that those items also be included in the contract, just to be sure nothing is ever missed.
2. Make Sure the Contract Describes All Charges in Detail.
A lot of times there are separate charges for the room, set-up, clean-up, table and chair rentals, linens, food, decorations, etc. and the contract should break down each item that is being charged separately. If it doesn’t, ask the hotel to re-draft the contract so that all charges are listed and itemized for you.
For example , if the Venue Manager says, "The room rental fee is $500 per day, but we will waive that fee if you spend at least $5,000 on food," make sure that is actually stated in your contract. Do not assume it is. Also be sure to note any other additional services provided by the Venue Manager, such as a bar, coat check area, or table centerpieces, and include in the contract the total fees that you have agreed upon with the Venue Manager.
3. Make Sure the Cancellation Policy is Fair.
Most venues are in the business of making money through special events, so they only want to hold a space for you if they are fairly certain you will actually hold the event. Most venues will require you to provide a large deposit up front (often between 50-100%), which they keep if you cancel. If you decide that this is too much money to put up front, be sure to discuss the possibility of lowering that amount with the Venue Manager before signing the contract.