Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: September 24, 2001

The tragic national disaster precipitated by terrorism has prompted the cancellation of many September and early October meetings. Both the short- and long-term impact on meeting attendance is unknown and uncertain. The Force Majeure or "Acts of God" clause in hotel contracts will be scrutinized for applicable terms. Conferon’s clause states:

"The performance of this agreement by either party is subject to acts of God, war, government regulations, disaster, strikes or threat of strikes (exception: Hotel may not terminate this contract for situations involving the Hotel’s employees), civil disorder, curtailment of transportation facilities, or any other emergency making it inadvisable, illegal, or impossible to provide the facilities or to hold the meeting. This contract may be terminated without a cancellation charge for any of the above reasons by written notice from one party to the other."

Certainly this clause would have applied immediately following the current disaster. Hotels and airlines have been giving overall favorable terms for attrition and cancellation without charge. Many hotels are being more generous in forgiving cancellation charges for groups that are willing or able to reschedule their meeting in the next six months. The larger issue now is how far into the future cancellations can be made that successfully rely upon this clause.

As travel becomes easier it will be more problematic as to whether "curtailment of transportation facilities" applies. A reasonable guideline for this parameter may be that if 25% or more of the attendees are prevented from traveling to the meeting because of curtailment of transportation facilities, performance may be excused.

Overriding the objective definitions of these terms is the way that attendees feel about their presence at the meeting. Even if they can get there, will they want to be there? In applying Force Majeure there is an issue called "frustration of purpose" or "commercial frustration." The contract was entered into with a certain purpose, say, of providing a program with an assumption of safety. If attendees feel that this purpose has been substantially destroyed because of an occurrence beyond their control, performance of the contract may be excused even if it is technically possible for attendees to get there. Jonathan Howe has written a new article that can be accessed at www.mpiweb.org/comfort/home/prof.asp, which discusses Force Majeure and this possible interpretation.

As Mr. Howe points out, communication with all parties related to the meeting is vital right now. The uncertainties in both our realistic and subjective worlds may lead you to need to cancel your meeting somewhere down the road using Force Majeure. Laying the groundwork for such a cancellation through close communication starting now may enable your group to be successfully excused from performance.

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