What Does Your Exhibitor Contract Say? Protect Yourself

An association executive asked me about requiring certificates of insurance from conference exhibitors. My primal response was “Of course you require certificates of insurance from exhibitors that is Risk Management 101.” But then I decided to investigate the world of meeting and event planning to see what associations are doing. Thanks to ASAE’s Knowledge Center’s Models and Samples I reviewed seven (7) exhibitor contractors. The findings surprised me; from a risk management perspective the indemnification provisions were rather weak and the insurance requirements were problematic. Bottom line, only one association had a good indemnification provision and all had problems with their insurance requirements.

Why Do We Care?

Every hotel, convention center or facility contract has an expansive indemnification provision. In most cases, the association agrees to indemnify, hold harmless and defend the facility for anything that goes wrong. What do these terms mean?

Indemnification or to indemnify means the association assumes the financial responsibility for the liability of another party such as the hotel or convention center. A hold harmless agreement requires the association to respond to certain legal liabilities of the other party. Most event contracts have an “intermediate” hold harmless form where the association is responsible for its sole negligence and the negligence of both parties. However, the agreement can be “broad” where the association holds the other party harmless for suits against the other party based on the association’s sole negligence, joint negligence of both parties or the sole negligence of the other party. The facility can try to impose liability for its sole negligence but that portion is unenforceable in a number of states. (Definitions provided by International Risk Management Institute’s Insurance Glossary.)

Consequently, hotel and convention center contracts or license agreements impose substantial liabilities onto an association. Limited attention is often given to the indemnification provisions since the association is usually in a weak bargaining position. While the association may not be able to modify the terms it can work with an insurance professional to make sure it has the appropriate insurance coverages and limits. Just as importantly, the association can transfer contractually some of these exposures to the exhibitors and other service providers (exposition companies, caterers, AV, entertainment).

Most facility contracts also hold the association responsible (liable) for the acts of any persons admitted to the facility by the association. One agreement states “For the purposes of this Agreement, the act of any person admitted to the Center by Customer shall be the act of Customer.” Therefore, the association is financially responsible to the facility for any legal liabilities caused by its employees and volunteers as well as the attendees, exhibitors, speakers, contractors, subcontractors and anyone else invited to the event. For example, if an exhibitor’s “swag” hurts a person or they serve food that causes food poisoning, the association is liable to the facility if the facility is involved in the loss or claim. A knowledgeable claimant or plaintiff will name every party even remotely related to the incident including the facility. For your protection, transfer this financial responsibility to the exhibitors and other service providers through your contracts.

What’s Wrong?

Indemnification and Hold Harmless Problems

Several of the exhibitor contracts focused on limiting the association’s liability from the exhibitor filing a claim against the association for damage to the exhibitor’s property or people. The contract should address this issue but it is more important to have a good indemnification and hold harmless provision especially if the facility contract has an “intermediate” or “broad” hold harmless provision.

The indemnification provision should protect the association to the fullest extent possible. Review the facility contract to determine your obligations and transfer the same responsibilities to the exhibitors.

Below are solutions to some common errors in indemnification provisions.

  • Clearly identify the provision with a heading such as Indemnification, Liability or Waiver
  • State that the exhibitor has to defend the association in addition to indemnify and hold it (and any other parties) harmless. Most insurance policies will not pay defense costs unless the contract specifically requires the insured (exhibitor) to defend the other party (you).
  • State what liabilities and exposures the exhibitor is assuming.
  • List all parties that the exhibitor has to indemnify. This should include the parties the association has to indemnify under its event contracts.

NOTE: Since this is a part of a contract or agreement, have your attorney review and approve the document before you use it. 

 Co-ordination with Lease

The Produce Marketing Association (PMA) has a great provision in its PMA Official Exposition Rules and Regulations that makes the exhibitors liable to the same extent that PMA is obligated to indemnify the owner of the building. Here’s the wording:

Exhibitor hereby agrees to indemnify, defend and hold harmless Exposition Management to the same extent that Exposition Management may be obliged to indemnify the owner of the building and other related entities as lessee or licensee of the exhibit hall or space. If there are any inconsistencies between Exposition Management’s lease or license for the exhibit hall or space and this agreement, the terms of the lease or license shall govern. If there are additional rules, regulations or terms or conditions that Exposition Management must comply with under its lease or license, to the extent they may be applicable to the Exhibitor’s booth, those additional rules, etc. are hereby incorporated herein by reference and the Exhibitor agrees to comply with them.

If you include a similar provision you should inform the exhibitors of the extent of your liability to the building owner so they can review their insurance program for the appropriate coverages.

Insurance

Insurance is the best way to fund an indemnification agreement. However the Insurance section is either overlooked or done poorly. Another blog post will more fully explain Insurance requirements.

First, make sure the indemnification provision is written to trigger insurance coverage. Second, describe the required insurance coverages properly. Your insurance agent or broker can help you develop the correct wording. Finally require the exhibitor to provide your association with a Certificate of Insurance and Evidence of Property Insurance prior to the event. Review the certificates to verify the exhibitor has the right insurance coverages.

You have too much at risk to have a weak indemnification provision in your exhibitor contract. The larger exhibiting companies will have no trouble meeting tougher indemnification and insurance provisions – they expect it. Some smaller companies may not have the required insurance but you can help them. Short-term special event general liability policies are available if an exhibitor needs help to meet the contract’s requirements. Your insurance agent can help identify or supply these markets if the exhibitor needs help. You can provide a valuable service to the exhibitor while protecting your association.

What to Do

So what does your exhibitor contract say about indemnification and insurance? Review your contract with your insurance agent and attorney. They can draft a stronger contract to protect your association from harm caused by others. Get to it!

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  1. #1 by Sandra Giarde, CAE (@sgiarde) on August 2, 2012 - 2:31 pm

    This a fantastic post full of food for thought for any of us who are having expos or trade shows. I think our indemnification language and policy is pretty good but will be taking a second look, for sure.

    What about those organizations who have already embarked on selling space and contracting with exhibitors for an upcoming event but wish to immediately re-write and strengthen their indemnification language in the contract? How should they proceed in regards to the currently executed exhibit contracts?

    • #2 by Leslie White on August 2, 2012 - 9:13 pm

      Sandra,
      Glad you liked the post. Unfortunately as an attorney once told me “asking for changes after a contract is signed is called begging.” You probably can’t change the contract but you could still ask for verification of insurance via a certificate of insurance. You can also ask to be added as an additional insured on the exhibitor’s general liability policy, again compliance is dependent upon how nice the exhibitor is or how much power your association has over the exhibitor.

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