Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: July 23, 2001

You may expose your group to liability if certain clauses are left out of your hotel contract. Among these are cancellation, room block performance, and Americans with Disabilities Act. Some industry professionals mistakenly believe that if there is no cancellation or room block performance clause in their contract they will incur no charges if the group cancels or picks up less than the contracted room block.

Since cancellation is a breach of contract, the group could be held liable for the full room block if it cancels in the absence of a clause detailing the terms of full group cancellation. It is preferable to add a weak cancellation clause rather than to take a chance and have no such clause.

If there is no room block performance clause (attrition or meeting room rental sliding scale based on room block performance), it is better to state clearly that the group will have no liability for room block slippage. If the contract is silent about room block performance, the group could be held liable for 100% of the slippage from the contracted room block. See the issues raised by Hyatt v. WIBC, 1999 WL 1041526 (W.D.N.Y.).

Have you ever wondered why it is necessary to have an ADA clause in your contract when The Americans with Disabilities Act is a federal law that all parties must abide by? The reason is that the law holds both parties liable for violations of the act if the parties fail to spell out each of their responsibilities.

The message is, beware – when it comes to cancellation, room block performance, and Americans with Disabilities Act, contractual silence is not necessarily golden.

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)