In the aftermath of 9/11 and Hurricane Katrina, many organizations canceled meetings that had been contracted months or years earlier. Because of the uniqueness of the situation, many hotels acquiesced. However, since that time, the issue of what constitutes asituation has been the subject of much discussion.
Force majeure is a legal term — literally, “superior force” — that provides a reason for terminating an agreement without liability. A provision does not have to appear in afor the concept to be applicable, but many hotels use contract language (like that in the far-right column) to limit their exposure.
First, this hotel-drafted provision says that the reason for termination must be an “emergency.” As one association learned the hard way, the definition of “emergency” depends on who's doing the defining. The group canceled a meeting because attendees — all government employees — were obligated to attend a government-sponsored event, the date of which was moved, creating a conflict with the association's meeting. In upholding an award of $275,000 for the hotel, an appeals court said, in part, that the situation was not an “emergency” of the type contemplated in the contract.
Today's economic situation has also been seen as a force majeure issue by some planners, who contend is entirely out of their control. As dire and unexpected as it may be, it also does not rise to the level of an “emergency” that would justify cancellation of a contract without liability.
What About the Economy?
The hotel-drafted provision says that the emergency must render performance by the hotel “illegal or impossible.” However, the doctrine of force majeure is actually broader, allowing termination without liability if the purpose for which the meeting is held is frustrated or performance becomes unreasonably difficult (but not necessarily impossible). For example, an organization holding a meeting to honor an individual could terminate without liability if the person is called out of the country (thereby frustrating the purpose of the get-together).
Third, the hotel-drafted clause says that the unanticipated occurrence must render it illegal or impossible for the hotel to provide meeting facilities. It says nothing about the group not being able to show up, which might be the case if, for example, a terrorist attack closed the air travel system.
Many planners try to expand force majeure to include other reasons why a contract may be terminated without liability, such as the unavailability of a convention center or a change in hotel ownership. While these may be unexpected, they are not, from a legal standpoint, force majeure events. If the parties agree that they are acceptable reasons for contract termination, that can be written into the contract, but keep in mind that termination language can cut both ways. It can provide a reason for the planner's organization to end a contractual relationship without liability, but it can also provide a rationale for the hotel to do the same.
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.
The performance of this Contract is subject to acts of God, government authority, disaster, or other emergencies, any of which make it illegal or impossible for Hotel to provide the facilities and/or services for Group's event or meeting. It is provided that this Contract may be terminated for any one or more of such reasons by written notice from one party to the other without liability.