Many hotel and convention centerprovisions can be difficult to understand, even for an experienced meeting planner, but the most confusing language is generally found under the heading “indemnification” or “hold harmless.”
To understand this often complex provision, one must first understand what happens when someone is injured while attending a meeting or exhibition. If the victim's damages are not easily satisfied, a lawsuit is usually filed, and any party with any relationship to the injury is named as a defendant. As an example, the litigation that resulted from a deadly fire at the Station nightclub in West Warwick, R.I., in 2003 involved 73 defendants. Many did nothing to cause the injury, but they were named because a victim wanted a court to figure out who was at fault. But defending a lawsuit can be costly, and many venues do not like to pay legal fees for things for which they had no responsibility.
That's where indemnification comes in. The hotel or convention center asks the group to contractually agree to compensate it for any money it must spend to defend against a lawsuit caused by the group's actions.
That's the concept of indemnification. However, many clauses prepared by hotels and convention centers seek to have the group compensate the property for any loss it incurs, regardless of who causes the loss. The proposed contract language seeks to have the group take responsibility for the actions of its attendees and “anyone entering with the express or implied permission” of the group. Some provisions go so far as to state that the group must indemnify the hotel even if the hotel causes the loss.
How Can You Protect Yourself?
There are obvious problems with broad indemnification requirements, not the least of which is that the hotel could attempt to hold your company liable for the actions of individuals over whom you have no legal control, e.g., meeting attendees. Also, your insurer is not likely to cover damages caused by someone other than the company's officers, directors, and employees. So a planner who does not fully understand what he is signing might unwittingly commit the group to a potentially huge financial payout in the event of an injury.
Planners should attempt to eliminate the group's responsibility for anything that it does not cause or anyone it cannot control. Stating that the group will indemnify the hotel “except to the extent that the injury results from the negligence or willful misconduct of the hotel, its employees, agents, or subcontractors” is one solution.
Such exceptions should be crafted to include all hotel “negligence,” not “sole negligence” or “gross negligence” because those terms have a precise legal meaning that is much more restrictive than simple “negligence.”
Another approach is to try to limit indemnification to the amount of insurance carried by the group so that a catastrophic loss does not deplete the group's treasury.
Right Back Atcha
Where a venue requests a group's indemnification, the group should seek a similar indemnification provision from the venue, since the group could be included in any litigation that was occasioned by the negligence of the venue's employees. However, many convention centers, especially those owned by cities or other government entities, are prohibited by law from providing indemnification because it amounts to an open-ended financial commitment that has not been approved by the entity's governing body.
Indemnification should also be considered when contracting with outside vendors, such as tour operators, caterers, and audiovisual companies, to make sure the company is protected if the actions of one of these vendors lead to injury or property damage.
Another key element of indemnification to keep in mind is that it's only a promise to pay. Thus, the indemnification provision should, in most cases, be accompanied by a requirement to carry liability insurance in a specified amount, perhaps naming the other party as an additional insured on the policy.
James M. Goldberg is a principal in the Washington, D.C., law firm of Goldberg & Associates PLLC. His practice focuses on representing associations, corporations, and independent meeting planners. He is the author of The Meeting Planner's Legal Handbook.