By Peter Deutsch
Anyone who has ever planned a Bar or Bat Mitzvah for their son or daughter has come to appreciate the amount of time and effort required to make their child’s celebration a memorable event. Just the selection of the venue, for example, can entail countless hours of walking through different spaces in order to find just the right one. But in time, after speaking or meeting with dozens, you’ve finally selected your venue, entertainment company, décor firm and other vendors. You are convinced that you are on your way to an amazing event and that the process from here on out will be more streamlined and manageable. And that’s when you receive the dreaded multi-page contract from each vendor which lays out the services that vendor will provide and the commensurate costs … or does it?
As the father of two teenage boys, my wife and I have had the pleasure of planning two Bar Mitzvahs, and I have reviewed numerous vendor agreements in connection with each celebration. Most of these contracts were well drafted and, as expected, designed to protect the interests of the vendor. Indeed, no one could quarrel with the fact that each vendor has a business to run and is only looking to protect itself from the myriad of risks it faces. For those without legal training (and even for some lawyers), however, these agreements can, at times, be difficult to understand and often contain pitfalls for the unwary.
Peter Deutsch and his family at his son’s recent Bar Mitzvah
Perhaps the most critical vendor agreement is with the venue where your affair will be held, as most families will spend the greatest percentage of their total event budget on the venue and catering. At the outset, one needs to be familiar with the concept of “minimum guaranteed revenue” and, more importantly, how it is calculated.
Minimum guaranteed revenue (“MGR”), as the name implies, is the minimum revenue that a venue will require to perform services. If you are having a large affair, the MGR is usually satisfied by the per person charge for each of the guaranteed number of guests. But if you are having a smaller party, the revenue from the guaranteed guests will often be less than the MGR, and here’s where it gets tricky. Your first instinct is that by the time you include your food and beverage enhancements (think s’mores station and martini bar, for example), you should easily be able to make up any shortfall. You may be surprised to learn, though, that your venue may only permit these enhancements to constitute a maximum of 5% of the MGR, for example. Therefore, depending on the amount of the shortfall, you could find yourself paying much more for your venue and catering than you had planned.
Another significant issue that impacts every vendor contract is what are the consequences if you have to reschedule or cancel your child’s Bar or Bat Mitzvah. For example, most venues have in their contract language that if you cancel your affair, you forfeit your initial deposit and any additional payments made under the contract. The theory here is that because venues are typically booked many months in advance, a cancellation makes the likelihood of the vendor’s booking another event on that same date extremely low, if not zero.
However, if your event has to be rescheduled because the venue is unable to host your affair due to an “act of god” or “for reasons beyond their control,” the venue’s agreement typically provides that it will have no liability to you other than to attempt to reschedule your event (while retaining all payments you’ve made to date). But that need not be the case. Indeed, while it is reasonable for a venue to retain all prepayments as liquidated damages in the event you opt to cancel your affair, the same rule should not apply if the venue is unable to host your celebration – even due to an “act of god”. This theoretical issue became a reality in 2012, when Hurricane Sandy battered New York City, rendering many venues situated on the East and Hudson Rivers unusable for weeks. Because switching the date of the Bar or Bat Mitzvah entirely isn’t usually a welcome idea – the child has been studying his or her torah portion and D’var Torah for weeks and the family is all flying in to hear it! – modifying the venue agreement at the outset to contemplate the flexibility to switch venues, if the worst happens, without forfeiting any prepayments can provide peace of mind to the whole family.
An additional topic to consider is the role of key performers. For example, it is not uncommon to engage a particular entertainment company with the understanding that you want a specific MC to perform at your child’s party. Indeed, while most entertainment companies will do their best to honor such a request, the agreement that they ask you to sign will nonetheless provide that any such performer is “subject to availability” and that the entertainment company “reserves the right to provide a substitute performer, if necessary.” Again, while no one could fault an entertainment company for having their contract contain such language to protect themselves, it is not unreasonable for you to request that the contract be revised to require that the entertainment company contact you in advance if a key performer is unable to appear at your affair and consult with you regarding the selection of a substitute.
These are just a few of the issues that, if not addressed, can have significant unforeseen, unintended and often, expensive, consequences for your event. With all of the moving parts and decisions that must be made, often months in advance, many families engaged in planning a Bar or Bat Mitzvah, especially for their firstborn, don’t have the experience to be able to foresee some of these and other pitfalls or don’t pay enough attention to the specific provisions of their vendor contracts at the time of signing. Unfortunately, it’s often the case that when the party is 30-60 days out, families are first considering questions like: will the venue provide enough electricity for my emcee, DJ, all of the games my child talked me into getting and the lighting company I had to bring in? What’s a 20-amp electrical circuit anyway and how many do I need? And my favorite – isn’t this included in the contract?
The good news is, if the issues are flagged in advance, most vendors are willing to make revisions to their contracts to make a prospective client happy (and because they don’t want to lose the business). Thus, a key component for a seamless affair is to have fleshed out with your vendors these and other potentially onerous provisions and to have a complete understanding of the specific services that each vendor will provide the night of your affair, how that translates into contract language and costs, and what revisions will be necessary to level the playing field. Contrary to popular belief, Bar and Bat Mitzvah contracts are for reading, not just for signing.
About Peter Deutsch
Peter Deutsch is a New York City-based attorney with over 27 years of broad-based corporate, transactional and business experience. He focuses on advising entrepreneurs, small businesses and high-net worth individuals in connection with business formation and capital-raising efforts, business development, potential acquisitions, sales of businesses and other commercial activities. And in his “spare time,” Peter had the responsibility for reviewing and negotiating the vendor contracts for both of his sons’ Bar Mitzvah celebrations. For more information, please visit www.peterdeutschlaw.com.
