Things to look out for when signing a facility lease

An event facility lease agreement is one of the most important documents that should safeguard an event organizer. Especially in the era of the SARS-CoV-2 pandemic, but not exclusively.

Regardless of the circumstances, a properly constructed event rental agreement and its provisions should not only protect the organizer in the instance that the event needs to be rescheduled but more importantly ensure that the planned event is carried out properly.

Contracts are worth negotiating

“A contract is made for bad times” – it is good for this slogan to guide all entities that enter into a facility lease agreement for any type of event. Before concluding a contract, each event organizer should imagine all potential points of contention, so that even before signing the final version of such a document, they can agree with the lessor on the procedure to be followed in case any problems arise.

When organizers want to rent space for their planned event, they are most often presented with a proposal to sign a lease agreement, which is already prepared by the lessor. This phenomenon is particularly popular in the case of renting space in hotels, restaurants, or other popular places for organizing meetings (conference centers, unique venues, etc.). However, it is not difficult to guess that such lease proposals are usually constructed in such a way as to effectively protect the owners of the facilities, without providing adequate protection to the lessees – i.e. event organizers.

Conclusion of a contract based on the template presented by the landlord is a perfectly acceptable solution, but only on the condition that the event organizer reads such a document carefully, precisely to protect their interests. If the provisions of the agreement do not protect the lessee sufficiently, it is worth presenting and then negotiating your proposals for changes to the agreement.

Scope of contract and price of service

Regardless of the current market situation, the event organizer should pay special attention to the description of the scope of the service to be provided by the lessor. It should be remembered that all-important elements of the service agreed before the conclusion of the contract verbally, by phone or e-mail, should be part of the contract. From the point of view of the event organizer, the description of the price of the service and the deadline for its payment is also crucial. It is important to pay special attention to whether the price has been determined as a fixed, lump sum, or whether it depends on the number of people who will take part in the event.

Furthermore, it is also worth noting whether the landlord has obliged the event organizer to pay an advance or perhaps a deposit. This is quite an important difference. An advance payment is refundable in case the agreement fails for various reasons – regardless of which party is at fault. A deposit, on the other hand, is important because:

• in the event of withdrawal from the contract due to the fault of the lessor, the deposit paid by the lessee should be returned to the lessee (in this case the event organizer) in the double amount;
• in case of withdrawal from the contract due to the fault of the lessee (event organizer), the deposit shall be forfeited to the lessor.

Contract amendment procedure

In the era of the pandemic caused by the SARS-CoV-2 coronavirus, the contract amendment procedure has become a particularly important element in lease agreements, for obvious reasons. In the current market situation, on the day of concluding a lease agreement, the organizer of an event cannot be certain whether the event in question will take place in the planned form or on the planned date, or whether it will take place at all (due to decisions made by clients, but also due to objective limitations and governmental restrictions that are difficult to foresee). Therefore, given possible unforeseen situations, the parties should provide for a procedure to reschedule the event, change the number of participants, or – often as a consequence of lower than originally anticipated attendance – reduce the lease space.

Information obligations of the parties

It is also extremely important in facility lease agreements in connection with an event held in the facility to designate appropriate persons for ongoing contact in all matters of the performance of the agreement. These individuals should have the right to make declarations of will on behalf of the parties, e.g. the right to agree to a change of date for a planned event. Other important factors include the obligation of both parties to keep each other informed of any situations that could make it difficult or impossible to fulfill the agreement. For example, if a case of COVID-19 infection was discovered on the premises of the hotel where the event is to take place, the lessee (event organizer) should be immediately informed about this fact and measures taken to eliminate the possible threat.

COVID-19 Recommendations

The facility lessor should also make representations regarding the performance of services in accordance with the COVID-19 prevention recommendations and, whenever requested to do so by the event organizer, should provide the adopted procedure for dealing with the disease. From the perspective of the event organizer, the facility should also have a procedure in place if a case of COVID-19 disease is discovered shortly before, during, or after an organized event.

If the facility fails to follow the appropriate recommendations (which unfortunately can happen), the event organizer should be able to withdraw from the contract.

Several contracts, the same solutions

When preparing a large event, the event organizer is often forced to conclude agreements with many (at least several) subcontractors. As a rule, separate contracts are concluded for renting the space where the event will be held, and separate ones for renting hotel accommodation or catering. It is extremely important – from the organizer’s point of view – that all these agreements correspond with each other. For example, when negotiating an agreement with the lessor of space for an event, where a meal prepared by a catering company will be served, concerning the possibility of changing the date of the event, the organizer (lessee) should remember about the need to negotiate similar provisions in the agreement concluded with the catering company.

These agreements should contain similar mechanisms to protect the interests of the event organizer in the event of a crisis when the implementation of the event as planned will not be possible.

The article appeared in Think Mice magazine – https://www.thinkmice.pl/news/prawo/2828-na-co-zwracac-uwage-podpisujac-umowe-najmu-obiektu