STUDENT PAPER
By Léa Chenu
SKEMA Business School
Paris, France
ABSTRACT
Cancellation clauses defines the “stipulation in an agreement that grants (to one or both parties) the right to terminate it before its expiration, under specified terms and conditions”[1]. Thanks to this clause the work that have been done before is protected. By giving this definition it appears like an evidence to have this clause in a contract and even more in the Event industry as it’s an uncertain sector. However, thanks to the MADAM matric used to compare differences in each different contract we can observe that lot of contracts don’t protect very well both parties in case of termination. The event planner has to really take care about the use of contract’s termination clause.
Keywords: Cancellation clause, Event, Music industry, Hospitality industry, Contract cancellation issue, Event planner, Performance contract.
INTRODUCTION
Event industry is composed of meetings, conferences, weddings, festival, charity and seminars. The event sector is one of the biggest that growing very fast and just second to construction. As reported by Statista, “Business-to-business (B2B) events industry revenue worldwide amounted to 30.3 billion U.S dollars in 2016, up from 29.3 billion a year earlier.”[2] According to Marketing Charts “in 2015, trade show and conferences are one of the top-3 sources byers turn to when researching a vendor’s products and services. Moreover, in the USA, between 2016-2026 meeting, convention and event planner are projected to raise faster than average as it will increase by 11%”[3].
Even if this is an attractive, growing and famous sector this industry is known to be an uncertain sector with something that always goes wrong. “The event sector involves also a lot money and time. In fact, budgets are one of the biggest challenges currently for event planners, followed by finding sponsors and attendee numbers.”[4]. Moreover, the high competition, huge risk, lot of partnership (venue, sponsorship, media, security, food and beverage) various clauses as bad weather or flight delays and transportation problem, clauses omits, non-payment, last minute change are few problems that usually happen when an event is organized and that involve to cancel it. Good examples happen in 2009 and 2010, when the event sector had to face to an economy crisis that caused a lot of cancellation of meeting and events, involving significant financial losses. Unfortunately, some event planners were surprised by the extent of their liability probably because they were not well informed or simply complacent about cancellation terms in their contracts. Neither part of the contract wants to have a cancellation that’s why it’s important to take time to determine clearly clauses that are understood and accepted by both parties. To face the cancellation problem, the contract has to be beneficial to both parties.
Managing well the cancelation clause is related to the way to manage a project. Understanding that it’s essential to have clauses that protect both parties if there is a cancelation event is essential. In fact, the owner and the contractor have to keep in mind that the contract has the simple goal to protect them from any possible cancelation and so they have to build a good relationship to implement cancelation clause. Having a contract with cancelation clause, will help the team organisation to create a sustainable project management process as they will be less stressful about « if something goes wrong ». In fact, as it’s an uncertain sector, the cancellation of an event can cause some delays, overruns, costs problem and then deteriorate the relation between contractor and owner. That’s why it’s important to understand how to manage cancellation in the event sector.
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Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs. This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.
How to cite this paper: Chenu, L. (2019). The Issue of Cancellation Clauses in the Event Sector, PM World Journal, Vol. VIII, Issue V, June. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/06/pmwj82-Jun2019-Chenu-cancellation-clauses-in-the-events-sector.pdf
About the Author
Léa Chenu
Paris, France
Léa Chenu is a graduate student in the Project and Program Management and Business Development program at Skema Business School in France.
She has always been a strong entrepreneur with a strong desire to work worldwide. The creation of a junior association “i-Majine” when she was 14th years old showed her desire to undertake projects from A to Z.
Her numerous international experiences (gap years in Australia, Canada’ university…etc) gave her the opportunity to be more open-minded, to understand cultures’ differences, to solve problems easier and to become more innovative. Highly interested in project management and its main upcoming challenges, she is getting certified by PRINCE2 and AgilePM.
Léa is not only defined by professional experiences. She has also one principal passion: the Musical. She is passionate about dancing, singing and doing drama, and she has played in several shows. She also really loves artistic roller skating; she won the French team champion title in 2011.
She can be contacted at: lea.chenu@skema.edu and https://www.linkedin.com/in/l%C3%A9a-chenu/
[1] What is cancellation clause? definition and meaning. (n.d.). Retrieved from http://www.businessdictionary.com/definition/cancellation-clause.html
[2] 100 event statistics (2018 edition). (2018, November 8). Retrieved from https://www.eventmanagerblog.com/event-statistics#eventindustrystatistics
[3] 100 event statistics (2018 edition). (2018, November 8). Retrieved from https://www.eventmanagerblog.com/event-statistics#eventindustrystatistics
[4] 100 event statistics (2018 edition). (2018, November 8). Retrieved from https://www.eventmanagerblog.com/event-statistics#eventindustrystatistics
