How to interpret your Event Rental Agreement
An event rental agreement is a contract that outlines all the terms an event host (the "Customer") must follow in order to rent materials, equipment, and/or services from an event vendor (the "Vendor"). The Vendor often provides a checklist of what is expected from the Customer in order to execute the event rental agreement contract. This checklist may include simple requirements such as request an item in advance and pay all required deposits on time. Or this checklist might include a variety of items, such as the Customer must: render an accurate headcount, make an accurate setup diagram, reserve the room in advance, ask permission to move furniture, remove tape from the floor, remove stains on fabrics, etc. If the event rental agreement contract contains a checklist, then the check list will be included in the agreement and covered in the agreement’s boosters and premiums section. Today’s event rental agreement contracts have lengthy booster and premium sections that contain checklists requiring the Customer to do all sorts of things, from stripping sheets off tables to pulling nails out of the floor. These obligations are not typically enforced. However, in an effort to prevent the event rental industry from being "outlawed," many event rental companies still make their Customers sign agreements notwithstanding their inability to enforce all the obligations contained in the agreement. All agreements are based on an exchange of something of value, called "consideration," and both parties must provide something of value to the other to form a valid contract. In an event rental agreement contract: The rental fee is the consideration the Organizer must provide to the Vendor. The host must pay the Vendor at or before the signing of the contract in exchange for an agreement to rent materials, equipment, and/or provide the service at the scheduled time and location. The honorarium is consideration bestowed upon the Vendor at or before the contract’s signature which is not further specified in the contract. The Vendor is expected to provide materials, equipment, and/or services at the scheduled time and location – without exception. Even if it is parked in the front of the house, the Vendor may not leave the event once it is signed and the honorarium is rendered. Because the contract is between a Business Entity and the Customer, the event Rental Agreement Contract will always be on the business entity’s form contract. This means that everything is negotiable! If the Customer can read and understand everything in the contract , then they should be able to negotiate a reasonable deal with the Vendor. Furthermore, the terms of the contract are always negotiable. The Custodian Schedule is a schedule that accompanies the contract outlining the dates and times when each item (material, supplies, or service) will be provided to the host at the specified location. There are two types of custodian schedules: Custodial administration is critical in the interests of upholding the agreement. During the course of an event, entitled altercations will arise. A guest will often cite some part of the agreement as a defense for altering a rental item by – for example – placing a sticker on a linen, placing food on a tablecloth, or moving the chairs in and out of the ballroom. Admittedly, these actions are universally inconsistent with cleaning requirements. An irresponsible action by a guest does not warrant the Vendor taking a strict or legalistic interpretation of the agreement because the Vendor cannot renegotiate the agreement after it’s out in the wild without the other party, which in this case is the party’s guest. Therefore, to avoid the difficult job of negotiating with unreasonable guests, a Vendor should allow the custodian schedule to be their guide. The Vendor must expect the unthinkable; and the unthinkable is not going to go away. And so the Vendor must document the unthinkable so any changes to the agreement are documented. A vendor, once signed, is expected to perform in accordance to the Custodian Schedule. If there is any change, the Vendor must honor the terms of the agreement. A Vendor is expected to uphold the terms of the contract as spelled out in the Custodial Schedule and any deviations should be avoided unless penalties to the Customer can be assessed in equal amounts to the deviation. For example, if the Customer moved the tables and chairs without notifying the Vendor that the table and chair arrangement was unsatisfactory, then the daily penalty fees in the agreement can be assessed to the Customer for failure to adhere to the requirements of the agreement (sometimes referred to as "the rules of engagement"). However, if the Vendor chose to ignore the deviations and proceeded with the event and allowed the guest to use additional materials without authorization, the Vendor would then be held liable for additional fees and penalties as further outlined in the contract.
Event Rental Contract Essentials
The following are essential clauses that should always be part of an event rental contract:
Payment terms: Just as there are payment terms for the event organizer to pay the vendor, there should be payment terms for the return of the rental items. For instance, if the rental items are to be returned in eight hours, the rental company may require the event organizer to return the rental items within four hours. Oftentimes, transportation and handling can be time consuming and the rental company may want to avoid a last-minute return. Generally, the earlier the return, the less likely that damage will occur to the items.
Cancellation policy: The event organizer should always have a cancellation policy included in the contract, especially if the event organizer does not have an unlimited budget. An event rental company should give the event organizer a break on price if the event is cancelled 30 or more days before the event date. Also, it should provide for a full charge if the event is cancelled the day before the event.
Force majeure: A force majeure clause provides that neither party is liable for any damages or loss occasioned by an act of God, a natural disaster, or other unforeseeable circumstance. The event rental company may also want to ensure that the event organizer provides for a force majeure and insurance-type clauses for its suppliers in the event that the suppliers’ nonperformance is caused by an act of God, a natural disaster, or other unforeseeable circumstance.
Limitation of liability: A limitation of liability provision restricts the liability of the parties. For instance, the provision can state that neither party shall be liable to the other for indirect, incidental, special, consequential, punitive, or exemplary damages. Because many event planners have to rely on the services that other suppliers provide, the limitation of liability is for mutual protection.
Indemnification: Both parties will want to indemnify the other against any claims, losses, liabilities, costs, and expenses (including reasonable attorney’s fees) arising out of the breach of the agreement, including any claims, liabilities, costs, and expenses related to bodily injury, death, personal injury, and damage to property caused by gross negligence or willfully wrongful conduct by the party or the party’s agents, employees, or sub-contractors.
Creating a custom Event Rental Agreement
Not every event requires the same type of rental agreement, instead it is important for both the client and the vendor to be able to personalize the rental agreement to fit the needs of the specific event. For instance, if you are planning a wedding you may want to be especially aware of what time has been set aside for the set-up process and what happens if an obstacle arises that prevents you from adhering to your set-up schedule and you do not get to set up where or when you want. In the context of an outdoor wedding, the venue is usually a park, a farm, a vineyard or an estate that is not necessarily going to be prepared for rain or bad weather and may not be readily available to a rental vendor and/or event planner in advance of the big day to set up and remove items. With respect to an evening wedding, you must also pay attention to when the rental company is set to pick up the rental items. Most rental companies will not pick items up until the following morning, however, if the event ends after midnight, the rental company could be made to wait some time before the rental items are removed from the venue. These types of issues can be addressed immediately in an event rental agreement so that there is no confusion about who is responsible for what. For an engagement party, you may want to stipulate between the parties that the rental items will be returned the next business day instead of stipulating that the rental items be returned the same day. In addition, you may want to include in the rental agreement that the client is responsible for breaking down tables and chairs (if necessary). Finally, with regard to cancellation policies, you should consider whether or not it is important to provide the client with an absolute maximum refund amount based on the time frame in which any cancellations are made. If you share the rentals among vendors and a cancellation occurs that you must attempt to fill with rentals you own, you may want to avoid having to pay your peers for a canceled event that they are not responsible for. Although placement and time provisions can be addressed, so should the situation where a client cancels an event.
Event Rentals Agreement Law and Compliance
Depending on your geographic area, there may be both state statutes and local municipal regulations or ordinances that apply to your event rental agreement contract. This is especially true when the use of certain equipment is restricted or regulated by the government, such as for amusement rides. Even if your state does not have any laws concerning the use of a particular piece of equipment, your city or county may. Because there is typically no standard event rental agreement contract used across the U.S., it is unlikely your rental agreement contract will contain provisions that comply with your local laws. It is essential you review your city or county rental agreement requirements and consult an attorney if necessary.
Using a standard, or generic, contract that does not comply with local licensing and permitting requirements or insurance requirements can be problematic. If you do not meet the requirements of the local municipality, your contract may not be enforceable. A good example is when an amusement park owner and operator uses a rental company to rent their rides to event planners who want rides at their community festivals. The rental company should have certain contracts in place with the ride owner/operator to ensure the rental company complies with local laws; otherwise the event planner/rental company could be subject to fines and liabilities.
Common pitfalls to avoid
One step that we take at our office is a review of all event rental agreements before they are signed by our clients. There are, unfortunately, many issues that can arise from an unruly client or vendor if you don’t work with an attorney during the events planning process.
Some of the most common mistakes that I see with clients on these contracts:
• Deposits and payments should be detailed. How much will be paid as a deposit, when is it due, when the final payment is due, etc.
• Cancellation rights, terms and conditions should be outlined. The ultimate goal is for the event to go off without a hitch, but if it doesn’t, what happens? When can a party cancel? What will happen to those payments?
• What happens if the party that rented the equipment cancels it? Can the vendor cancel it? What happens then? Again, a good rule of thumb is to ensure everyone is protected if something unexpected should occur .
• Bad weather can also raise issues. Does the event plan have a plan B if the weather turns sour? Is rainfall acceptable? Will the party lose its deposit? These are all important details that should be included in the event contract.
For example, an outdoor wedding is planned, but inclement weather arises. The planner decides to move the event indoors, but the caterer has prepared food for an outside event and does not have capacity to move it inside. This leads to a situation where the planner and caterer have a dispute because the caterer cannot handle the unexpected change. Clearly there were not adequate plans in place that anticipated a "Plan B" if the weather was too bad for an outdoor event. A potential lawsuit could come out of this situation.
The above example could have been avoided had an attorney reviewed the rental agreement and talked with the parties about their rights and the unforeseen issues.
Bargaining with the Other Party
The key to a successful event rental agreement contract is to start the process effectively communicating with your lawyer, so the contract is crystal clear from the beginning. This means that both parties understand what the contract stipulates. In addition, it makes it easier for the lawyer to provide counsel as to what can and cannot be negotiated. Regardless of whether you are an event organizer outlining the scope of care for a general contractor, or a general contractor specifying your rights for cancellation, if the three parties are communicating from the outset, it is much more likely that the contract can be properly negotiated.
One area to consider can also work in your favor, or against you, as a general contractor looking out for your interests. Most event rental agreements will stipulate that the item being rented or used is to be returned and/or cleaned to its original condition, or what is specified between the parties. Things happen though, especially with fragile items used at large events. As a result, you may find that if you have left things in great condition, you have still incurred unnecessary costs. That is why it is paramount that you specify who the liability falls on if an item is lost, damaged, broken, and/or stolen. For example, some events simply are unfairly targeted by thieves, who may steal glass items and even break items that they think they are purchasing, only to not buy them after breaking them. Under New York law, if an item is stolen or damaged and the person taking possession has the care of the item at the time, they are liable to pay the value of the item or repair costs. Nevertheless, some rental agreements will specifically state that regardless of who damages the property, the person renting the item is liable. Allowing this in the contract can cost you thousands of dollars, even if you were renting the item for your own home entertainment needs for the weekend.
Moreover, as the organizer of the event, it is important to also consider what happens to the equipment after your event is completed. Sometimes, vendors pull together all kinds of promises to lure you in, but the actual end point where they return and clean everything up is not necessarily in your best interest. For example, if you have rented a spacious tent for the event, it is important to specify who is responsible for taking it down after the party is over. In some occasions, the contract may leave it entirely up to the vendor, or worse—doesn’t specify who gets it done! This means that you could end up having to pay extra out of pocket to have someone take the tent down.
Event Rental Agreement examples and resources
The following are links to sample templates and resources related to drafting an event rental agreement contract that the reader may find helpful as additional guides .