About Signing that Contract
A contract is a legally binding agreement between you and the venue, be it a hotel, a restaurant, a resort, a caterer or other organization that's providing services. You will be committing to pay for "x" number of people at "y" price.
If your contract specifies a minimum number of people that you guarantee, then you will be responsible to pay for that number. So if our minimum is 125 people and only 100 show up, the signer(s) of the contract is/are responsible for paying for those 25 people. At say, $50.00 a head, that would be $1250.00 you would still owe the venue. You don't have to pay tax for those 25 people, nor the tip (as much as 21%) on those 25 people. But you do have to come up with $1250.00
This is why negotiating to lower the minimum number of people to hold the room is very important.
Now suppose you have a reunion planned and a contract signed and for some unforeseeable reason you have to cancel it.
Well guess what? You are still responsible for paying cancellations fees according to the cancellation schedule in your contract. In our case if we cancel 180-90 days prior to the reunion, we are liable for 50% of the estimated food revenue. From 89-30 days prior, we owe 75% of the estimated food revenue. If we cancel from 29 days prior to the day of function, we owe 100% of the food revenue.
That worst case would be 125. x 50.00 per plate = $6250.00 that you, the contract signer(s) would owe. Now odds are this won't happen. Or if it does the prepayments you've collected will cover your costs.
But that said, my advice is: limit your exposure and ask some key people on your committee to share in signing the contract with you. There's no reason you should shoulder the responsibility alone. I asked 5 of my most active committee members to co-sign with me. You can ask 10 or even 15 to lessen the liability per person. Some may say "no," but most will say "yes." You just need to anticipate the degree of exposure and be up front about it. Cancellation is not your major concern, but having too few people show up to make the "minimum" is.
So share the risk and add some signature lines in your contract so more than one of you can sign.
Anyone have any nightmare stories about getting stuck with payments? Please share with us.
If your contract specifies a minimum number of people that you guarantee, then you will be responsible to pay for that number. So if our minimum is 125 people and only 100 show up, the signer(s) of the contract is/are responsible for paying for those 25 people. At say, $50.00 a head, that would be $1250.00 you would still owe the venue. You don't have to pay tax for those 25 people, nor the tip (as much as 21%) on those 25 people. But you do have to come up with $1250.00
This is why negotiating to lower the minimum number of people to hold the room is very important.
Now suppose you have a reunion planned and a contract signed and for some unforeseeable reason you have to cancel it.
Well guess what? You are still responsible for paying cancellations fees according to the cancellation schedule in your contract. In our case if we cancel 180-90 days prior to the reunion, we are liable for 50% of the estimated food revenue. From 89-30 days prior, we owe 75% of the estimated food revenue. If we cancel from 29 days prior to the day of function, we owe 100% of the food revenue.
That worst case would be 125. x 50.00 per plate = $6250.00 that you, the contract signer(s) would owe. Now odds are this won't happen. Or if it does the prepayments you've collected will cover your costs.
But that said, my advice is: limit your exposure and ask some key people on your committee to share in signing the contract with you. There's no reason you should shoulder the responsibility alone. I asked 5 of my most active committee members to co-sign with me. You can ask 10 or even 15 to lessen the liability per person. Some may say "no," but most will say "yes." You just need to anticipate the degree of exposure and be up front about it. Cancellation is not your major concern, but having too few people show up to make the "minimum" is.
So share the risk and add some signature lines in your contract so more than one of you can sign.
Anyone have any nightmare stories about getting stuck with payments? Please share with us.
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