CLAUSE: All room revenue is commissionable at 10 percent to Smith Meeting Services. Hotel agrees commission will be paid to Smith Meeting Services within 30 days of settlement of the Group master bill.

EFFECT: A simple clause like this can (and has) put a hotel in a very awkward position. For example, this standard contract clause can get complicated if the group discontinues its relationship with the independent/third-party meeting planner, Smith Meeting Services, prior to the meeting dates.

Groups and independent planners both need to clearly understand at what point the independent planner's commission is earned — is the 10 percent earned at the time the hotel contract is signed? Or is it earned only after the meeting dates have come and gone? The commission is payable to independent planners for specific services — what those services are should be clearly spelled out in the contract between the group and the independent planner.

The hotel is contractually bound to the party with whom it executed the contract, so most hotels will honor a request by that signing party to change who gets the 10 percent commission. If the group representative signed the contract, the group may request that it or a different independent planner get the commission. If the contract is signed by the independent planner, the hotel is most likely to pay the commission to the independent planner, regardless of changes in the relationship between the independent planner and the group.

If the group intends to retain the right to be able to unilaterally change the party to which the commission is to be paid, the group should discuss this with the independent planner and add language to this effect to the contract.

CLARIFICATION:

The above information is not intended to suggest that the independent planner in the scenario presented would not be able to recover commissions due.  If the independent planner is found to be an intended third party beneficiary, the independent planner may still be able to recover commissions from the Hotel or the Client.

For further reading, visit Checklists/How To's: Law and Contracts

Tyra W. Hilliard, Esq., CMP, is an educator, consultant, and attorney on legal, risk management, and ethical issues. Her consulting and law practice focuses on representing associations, nonprofits, and independent meeting and event professionals. Her Web site is www.tyrahilliard.com and she can be reached by e-mail at tyra.hilliard@gmail.com.

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