Worried About Event Cancellations? Here’s How To Protect Your Business.

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Whether you work in event management, marketing, audio-visual or photography services — you know that a lot of work goes into making a great event.

For many businesses, a single event can be your biggest source of revenue and marketing.

So, when you’re planning months in advance of an event, it’s important to ask yourself two things:

What’s the worst thing that could happen?
How can I stop it from happening?

In many cases, the worst-case scenario is your event being cancelled.

Often, the event could be cancelled because of something outside of your control.

An event cancellation could involve losing a lot of money — from refunding accommodation to venue hire, catering, photography, speakers and other supplies. The reputation of your brand and the morale of your employees could also be at risk.

For an event that may have taken months to plan, cancellation can be a huge headache. Therefore, it’s important to understand how to protect yourself from these risks.

One of the best ways to protect yourself when faced with event cancellations is by having the right legals in place. So, let’s walk through the legal steps you should take to protect yourself as an event organiser.

Step 1: Get Your Business Structure Right

Whenever we speak with businesses, one of the first questions we ask is: what is your structure?

You could be a sole trader running your business independently, you could be operating a partnership with others, or you may already have a company registered.

Running your business as a sole trader or partnership can carry lots of risks, particularly in the events industry. It means that you (as well as any business partners) could potentially be personally liable for anything that could go wrong along the way.

The last thing you want is to be deep in debt from refunds and cancellations, only to find that you and your business partners’ personal assets are at stake.

As such, it’s always a good idea to consider registering a company as early as possible.

Registering a company means you set up a separate legal identity under which your business operates. The business becomes separate to you so that, in the event that something does go wrong, you have “limited liability”.

In other words, you won’t be held personally liable for any debts.

In the events industry – where you can never be 100% certain that everything will go as planned – having a company structure as a safety net is a healthy first step in ensuring you’re protected from any risks.

Step 2: Make Sure Your Contracts Are Strong

One of the most important considerations for any business is to ensure strong contracts are in place.

This is even more important in the events space.

Generally, a contract (even a standard form agreement) is a good way to protect yourself, as it will set out what you and other parties have agreed upon.

You can have contracts in place with your clients, attendees, suppliers or any other service providers who are assisting with the event.

Importantly, a contract will outline what will happen in particular situations — such as when the event is cancelled.

If you use standard form agreements, your contract will normally have terms around:

Scope of services
Payment
Termination

However, these may not be enough to protect you if an event is cancelled. To ensure you’re fully protected, you need to check the cancellation terms in your contract.

Let’s run through some examples that demonstrate why it’s important that you thoroughly look over your contracts – and, specifically, their cancellation terms – when you’re running an event.

Example 1

Imagine you are running an events management business and your biggest client, who has asked you to organise their annual event, requests that you cancel the event entirely. This event is the main revenue source and marketing arm for your business, and typically helps you attract future clients.

If you haven’t properly examined the cancellation terms in your contract, your client could potentially not pay you for the work you have already done — putting your business out of pocket.

Further, you may have already locked in agreements with suppliers, caterers, venues and other stakeholders. If you have contracts in place with all these stakeholders, you’d have to cancel all of them.

And, to top it off, you may have already had plenty of attendees purchase tickets to the event.

This can leave you facing an incredibly stressful scenario: refunding tickets, cancelling supplies that have already been ordered and notifying stakeholders who’ve already committed to your event.

In this case, you should make sure that it’s clear in your contract how much notice is to be provided prior to cancellation and what percentage is payable in those circumstances.

Even if you don’t work in events management, similar risks could be faced by service providers such as photographers, videographers, suppliers and creative agencies who work in the events space.

If you’ve prepared yourself to provide services in the lead up to an event, you should make sure you’re adequately prepared for the event to be cancelled. This is particularly crucial if you are paying your own staff to prepare for the event, or if you’ve already purchased supplies or equipment in advance.

So, let’s look at another example.

Example 2

You run a local restaurant and you’re providing catering for a big event. In the lead up, you have rostered particular staff to work the event and you’ve ordered food supplies specifically to cater for it. You might have also decided to close your restaurant that day just to have enough resources for the event.

If this event is cancelled, that’s money out of your pocket. Unless you have clear terms in your contract to protect you.

In this case, you would need a Service Agreement that sets out the terms of your engagement with the company running the event — specifying cancellation periods, fees and refunds of deposits.

A good lawyer can help you draft a contract that will set out the terms and fees under which a party may cancel your contract. This way, you’re protected as much as possible from these unpredictable situations.

However, it’s important to do this right, as cancellation fees can sometimes be seen as unfair under the law.

If you’re concerned, you can have a lawyer review your contract or you may want to look at revising your contract altogether.

Step 3: Speak With A Lawyer

Ultimately, it’s always best that you speak with a lawyer to understand your specific business risks.

Whether it be drafting contracts, setting up a company structure, or even applying for a trade mark to stop competitors from using your event branding — a lawyer can help you navigate the challenges associated with working in the events space.

And, since every business is different, you’ll likely require legal assistance that’s tailored to your business’ specific, long term needs — such as help with drafting customised contracts.

Need More Help?

If you’re still feeling a little uncertain on how to keep yourself safe from these business risks, we’re here to help!

We’ve spoken with thousands of businesses – from freelance photographers to large corporate event managers – and helped them protect themselves from their worst-case scenarios.

Feel free to reach out to our friendly team at 1800 730 617 or team@sprintlaw.com.au.

Regie Anne Gardoce

Regie is the Legal Transformation Lead at Sprintlaw, with a law degree from UNSW. Regie has previous experience working across law firms and tech startups, and has brought these passions together in her work at Sprintlaw.

Tomoyuki Hachigo

Tomo is the co-founder of Sprintlaw and a commercial lawyer with a broad range of legal experience. Before starting Sprintlaw, he was an M&A lawyer at a top-tier law firm advising businesses of all sizes from large corporates to startups.