EVER FIND yourself baffled by legalese? You're not alone. Here's a typical problematic clause — and expert legal advice on how to fix it.
“The Hotel will allow Group 10% room-block shrinkage without any liquidated damage payment. For shrinkage over and above this allowance, the Hotel will require payment from Group for each unused room night at the confirmed group average rate plus applicable tax for your committed room block. Such charge will be added to and payable as part of your Master Account.”
This provision is riddled with problems, such as the fact that the attrition calculation could be subject to different interpretations: Does the group owe damages up to 90 percent of the block or up to 100 percent of the block?
It also requires the group to pay 100 percent of the room rate for each unused room. The law of damages says that the injured party should be able to recoup lost profits, not lost revenues. The planner should negotiate to reduce the damages to a level corresponding to lost profits, not total room rate.
It also includes tax in the attrition damages. Some states do not require that contract damages be taxed as sales, so unless the law requires it, the planner should not agree to pay it.
The last sentence gives the hotel the right to charge attrition damages as part of the master account. Because attrition damages are often disputed, they should be billed separately, and the parties should agree in writing that no interest accrues until 30 days after dispute resolution.
One last point: There is no mitigation or “resell” language in this provision. The group should add language providing for a credit against attrition damages for any sleeping rooms resold by the hotel.
Tyra W. Hilliard, Esq.,(tyra@sumnerassociates.net) is an attorney at Sumner & Associates, P.C., based in Suwanee, Ga.