How do we mitigate venue hire risks this holiday season?

Tania Longmire
By Tania Longmire December 8, 2018 18:20

As we are now in the festive season, the NGCAA takes a look at some of the key issues relating to venue hire and the unfortunate situation of possible damages to your function room.

Many clubs have function rooms or dining areas that they wish to allow their members or the public to hire for various events.

So, what happens when the hiring party (member or non-member) causes or allows damage to be caused to the room or equipment?

Many hirers will assume that by paying a sum of money to hire a room, they will be covered by the club’s own insurance should there be any damage to the room they hire.

However, it may be the case that a club does not wish to make an insurance claim depending on their policy excess and the effect the claim would have when it comes to renewing the policy.

This article covers:

  • Contracts
  • The Consumer Rights Act 2015
  • Security Deposits or Bonds
  • Insurance
  • Contracts.

Contracts

Clubs should have a written contract in place detailing all the relevant terms for the hire of the room or other facilities. This is something that can be drawn up in standard form and used each time the room is hired. The document would allow for the addition of the appropriate party names, date, time and nature of the event and so on. It is important to have a good, detailed contract in place as if not, it will be extremely difficult to recover any compensation (‘damages’) for damage caused to a function room.

The contract must include a clause detailing the use of the room and what the hirer (and party) is or is not allowed to do. This lets clubs make clear to the hirer the level of care expected from them when using the room and facilities. The contract must also include details of the action the club may take should damage occur and at what financial level the club may take the action.

Contracts should also include the following:

  1. Hours of use and any penalty or charge for extended use, for example, past midnight
  2. The club’s ability to ask a member of the party to leave the premises (especially if they are intoxicated or causing disruption)
  3. The level of damage a club is prepared to accept:
  4. a) What if drinks are spilt on the floor? Can carpets or flooring be easily cleaned without incurring substantial loss or closing your premises?
  5. b) What if items are damaged? For example, a table is broken or a chair cover ripped?
  6. c) Are there pictures on the wall or glass-fronted trophy cabinets in the room? What if they are damaged?
  7. d) The payment of a bond (or damage deposit) by the hirer to be refunded on satisfactory inspection of the area following its use for the function. The bond could be held back to cover the cost of repairs to any damage or cleaning that may be required and the remaining balance paid back to the hirer.

The Consumer Rights Act 2015

Such contracts as detailed above fall under the Consumer Rights Act 2015. This means that contracts must be set out in a clear and understandable way to allow the hirer to make an informed decision whether or not to enter into the contract. The wording has to allow them to understand their rights and obligations, how these link together and the consequences that may be imposed on them should they breach one or more of the terms.

Contracts must be drafted so they are fair for the party without the power to negotiate. This would be the hirer if a club decided to use a standard form contract each time someone wanted to hire a function room. If terms in a contract are unfair so that the rights and obligations are weighted in favour of the club, they may not be enforceable by the club against the hiring party. By the same token a contract that is ‘equal’ to both parties is not necessarily a fair contract.

It is advisable, if a club does not already have detailed contracts or a contract template they can use, that they seek legal advice from a specialist in relation to this to ensure they are fully compliant and are able pursue a claim should the need arise.

Security deposit or bond

Depending on the amount of the bond requested and agreed to be paid by the hirer in addition to the room hire charge, the damage caused may be substantial enough for the club to bring a claim against the hiring party for damages for breach of contract. Damages are designed to compensate the party that has suffered the loss rather than punish the hiring party.

It is important to think about the commerciality of a security deposit or bond. Depending on the cost of hiring a room, a club should consider the level of deposit they require from a hirer. This may be depending on a club’s location, facilities available, value of items being provided to the hirer with the room or even items on display in the room.

It may not be suitable to charge a hirer the same again as a security deposit, which they have already paid for the hire of the room. The nature of the function, the food and drinks served may all be contributing factors when deciding on the amount of deposit required.

Insurance

Having thought about the above, a club should now consider, in the event of damage being caused, what is the likely cost of repair to them and is this something that could be dealt with by their insurance company? A club will, no doubt, have an excess to pay for any claim that they make. Consideration should be given to the level of excess and whether this is an amount recoverable from the hirer by way of a bond mentioned above.

When thinking about insurance policies, a club will also need to think about the policy they currently have in place or are thinking about putting in place. There may be a requirement or clause in the policy requiring that they notify their insurer each time someone hires their facilities or function room, or allow sight of the contract that is to be used each time between hirer and the club.

The insurance provider may wish to be party to the contract to allow them to pursue the hiring party directly when seeking to recover costs and expenses they have paid to the club in the course of returning the function room or facilities to the condition they were in prior to the event.

For more advice on recruitment, employment or other matters of law affecting golf clubs, please contact NGCAA chief executive Alistair Smith. 

The National Golf Clubs’ Advisory Association (NGCAA)

The Threshing Barn, Homme Castle Barns,

Shelsley Walsh, Worcestershire, WR6 6RR

Tel: 01886 812943

email info@ngcaa.co.uk

www.ngcaa.co.uk

 

Tania Longmire
By Tania Longmire December 8, 2018 18:20
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