This article has been written by Ansari Qamar Zarfishan, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.
Taj Palace Hotel is one of the famous hotels in Mumbai, which provides luxury rooms, suits, venues, and banquet halls for a variety of events. But, can you use a venue without any rights and obligations? Who will be responsible for conducting the event and indemnifying the owner for any wrong done? When you wish to use a premise for conducting any event such as meetings, weddings, parties, etc you have to book that premise or venue by entering into an agreement. We will discuss in this article what is venue hire agreement, what are the essential clauses of a venue hire agreement, and how to draft an effective venue hire agreement for Taj Palace Hotel.
What is the venue Hire Agreement?
An agreement between the owner of the venue and the hirer for the use of the venue for a particular purpose or event is called a Venue Hire Agreement. The venue can be used for meetings, seminars, weddings, parties, get together, the launch of a product or movies, etc. The agreement should cover the details of the premises to be hired, the purpose of use of the premises, start time and end time of the venue being used, number of rooms required, number of attendees at the venue, payment clause, rights and obligations of both the parties, etc. We will discuss all the clauses in detail in the next paragraph.
What are the essential clauses of a venue hire agreement?
The essential clauses that are to be clearly covered without any ambiguity, under a venue hire agreement are:
1. Parties Clause – The agreement should have the details of the parties, their name, address, in case of a company registered CIN number, telephone number and email address. The owner of the venue is called the “Owner” and the person hiring the premises or venue is called the “Hirer”.
2. Definitions – All the terms used throughout the agreement should be defined in the definition clause to avoid any misunderstanding. More specifically, the premises should also be defined.
3. Booking details/ Purpose –The agreement should contain details regarding the use of the venue, the activities to be conducted on the premises during the period of hire. The time and date of the booking should be provided in detail.
4. Payment – This clause should contain the mode of payment, time, charges payable and the deposit that is to be made for the use of the venue.
5. Cancellation – When and how cancellation can take place, what happens to the deposit in the event of cancellation.
6. Insurance – The hirer shall indemnify the owner against all the losses, expenses, liabilities, claims and damages incurred by the owner due to act or omission of the hirer, its servants or agents.
7. Hirer’s Responsibility – The hirer will be responsible to use the premises for a lawful purpose and maintain the premises in a good condition and not causing any harm to the venue or such other responsibilities as provided in the agreement.
8. Dispute resolution and jurisdiction – This clause is also essential as it clearly states what laws will govern in the event of a dispute, which court will have jurisdiction, and how the dispute will be resolved.
How to draft a venue hire agreement for Taj Palace Hotel, Mumbai?
Now that we know about the important clauses that are to be contained in a venue hire agreement, let us understand how to draft the same for Taj Palace Hotel, Mumbai.
The Definition clause should cover all the terms used in the agreement and it should mean the same throughout the agreement.
For example, Premises – the premises mean the property and/or area identified by Hirer to the Owner for the purpose of the event, including but not limited to, entire hall, restrooms, changing rooms, kitchen, lounge, and garden.
After defining the premises in short, it should be explained in more detail in the agreement while drafting the purpose clause or you can even give the detail of the premises in a separate Schedule at the end of the agreement.
2) Purpose of Use
This clause should mention the purpose for which the venue is hired, the number of people allowed in the event, the time of attending and vacating the event, and which part of the premises can be used for the event.
2.1 The Hirer, its employees, and sub-contractors will be permitted to use the said Premises for conducting the political event of promoting the Kaam Karo Party. For this purpose, the Hirer, its directors, agents, employees, and sub-contractors can enter the premises a day prior to the Event for the purpose of making any operational planning arrangements necessary for the smooth functioning of the Event at such date and time as shall be agreed in advance between the Parties.
2.2 The Event should permit a maximum of 500 people including only adults, guests of the event, plus catering staff and other vendors permitted by the Hirer.
2.3 This Agreement is entered into for the purpose of conducting the political event, the Hirer shall not use the said Premises for any other purposes.
2.4 The Hirer shall arrive and vacate the Premises as stated in this Agreement.
2.5 The said Premises is available from 9:00 am to 10:00 pm.
2.6 The Hirer has permission to use the entire hall and restrooms, changing rooms, kitchen, lounge, and garden are charged separately and would be included in the bill accordingly.
The term clause states the date of the executing of the agreement and how long the agreement is effective.
4) Payment Clause
The payment clause should include the booking amount that is paid at the time of booking the venue, the amount of security deposit that is paid before the venue is being used and the Final payment which is paid prior to the commencement of the event. This clause should also mention the mode of payment and bank details.
4.1 Booking Amount: The Hirer shall confirm the booking of the said Premises by paying the amount of INR 5000 (Five Thousand Rupees Only) as a “Booking Amount” within ten (10) days following the signing of this Agreement. This Booking amount is non-refundable on the basis of genuine pre-estimate loss of the Owner as it may not be possible to re-hire the Premises to another Hirer at the same or any other price, and this is not intended to operate as a penalty. All the payment shall be made in the manner stated below.
4.2 Security Deposit: The Hirer shall pay the amount of INR 45,000 (Forty-five Thousand Rupees Only) to the Owner as a “Security Deposit” which is explained in detail in Clause 5.
4.3 Final Payment: The Hirer shall pay the amount of INR 1,25,000 (1 Lakh Twenty-five Thousand Rupees Only) as a “Final Payment” seven (7) days prior to the commencement of the Event.
5) Security Deposit Clause
This clause should mention the details of the Security deposit and how it will be refunded and what are the circumstances when it will be forfeited.
5.1 Hirer shall pay Security Deposit of INR 45,000 (Forty-five Thousand Rupees Only) to the Owner as an advance payment within thirty (30) days of the signing of this Agreement vide Bank transfer (account details specified above).
5.2 The remaining Final Payment shall be made seven days prior to the commencement of the Event.
5.3 The Security Deposit will be refunded at the end of the Hire Period. In the event of any damages to the property or the said Premises, caused while conducting the Event, or any extra cleaning, rubbish removal, repair, or reinstatement required after the event, the said expenditure will be deducted from the Security Deposit.
5.4 The Hirer can retain the Security Deposit until the Hirer or its employee or sub-contractor vacates and cleans up the said Premises.
5.5 In the event the Owner does not meet its obligations set out under this Agreement, the Hirer can cancel this Agreement and ask for the refund of the Security Deposit.
5.6 The Owner reserves the right to forfeit the Security Deposit in the following situations:
- a) If there is any damage or loss caused to the property, or the Premises during the Event;
- b) Breach of any terms and conditions of this Agreement.
- c) Fails to make Final Payment.
6) Supplies, Equipment, and Deliverables Clause
This clause should mention the equipment that is to be delivered to the premises, the time of delivery, whether the owner can reject the delivery of the equipment, what products can be used for decoration and how these supplies and equipment should be removed from the premises.
6.1 All the equipment that is to be delivered to the Premises must be approved by the Owner and delivered ten (10) days prior to the Hire Period. This equipment includes; food and beverage requirement, equipment and technical requirement, health and safety requirements, etc.
6.2 The Owner reserves the right to refuse the delivery of any equipment that is considered dangerous or harmful to the Premises, its employees, agents or guests.
6.3 All Premises decorations should be freestanding i.e., they should not touch the fabric or the content of the Premises. All the decorations must be approved by the Owner.
6.4 Wire, floral wire, non-stick tapes can be used to decorate the Premises.
6.5 Gas burners, naked fires and flammable substances (gasoline, kerosene, generators, etc.) are not allowed near fireworks and flames.
6.6 At the end of the Event, or at a time agreed by the Parties, the Hirer shall remove all the equipment and decoration brought to the Premises. Anything left in the Premises after the Hire Period may be stored by the Owner at the Hirer’s expense and if not removed within 7 days of the end of the Hire Period, the Owner may dispose of the same as it deems fit without any resulting liability to the Hirer.
6.7 The Owner is not responsible for any equipment or other supplies at the Premises before or after the Event and the Hirer will fully indemnify the Owner in this regard.
6.8 The Owner shall take appropriate measures, within its control, to supply lights and equipment in good working condition. The Owner reserves the right to insists that its technician be present at an Event and charge appropriately.
6.9 The Hirer agrees to use the equipment belonging to the Owner in a safe manner and return it in good working condition. Where any equipment is damaged the Hirer will be liable for such damages.
6.10 The Premises must be clear of all the Hirer’s properties and in a clean and useable condition by the time stated in this Agreement.
7) Health, Safety, and Security
This clause puts forward the responsibilities of both the Hirer and the Owner. Since the pandemic is going on, health issues are gaining priority in the country. Thus, this clause should contain the health and safety policies and what precautions are to be taken while using the premises. The Owner should lay down the safety management system and ensure that its employees and contractors are trained to use these safety mechanisms and also the COVID guidelines are followed strictly.
8) Cancellation Clause
This clause mentions the conditions when this agreement can be canceled by either party. What are the consequences of such cancellation, whether and how any amount will be refunded?
Cancellation by Hirer:
If the Hirer cancels the Event, the Owner will retain the non-refundable Booking Amount and unless specified in writing, the following cancellation provisions shall apply:
Where the cancellation occurs within:
a. 30 days of the event, the total amount including Final Amount and Security Deposit will be will not be payable to the Owner;
b. 15 days of the event, 50% of the Final Amount will be payable to the Owner;
c. 7 days of the event, 75 % of the Final Amount will be payable to the Owner;
d. 3 days of the event, a full 100% of the Final Amount will be payable to the Owner.
The sample clause above is about the cancellation by Hirer, likewise, you can have a sub-clause for cancellation by the Owner and write down all the conditions of cancellation of the agreement.
9) Insurance Clause
The Hirer will have to ensure the Owner for any loss or damages caused to the owner.
9.1 The Hirer shall maintain during the Hirer Period, adequate public liability insurance cover providing indemnity against any loss, damages, costs, and expenses for which the Hirer may become liable under this Agreement.
9.2 The insurance policy will be with the reputed insurer and on terms acceptable to the Owner and shall have a minimum policy limit of Twenty Lakhs Rupees (INR 20 Lakhs only) for any one occurrence but be unlimited in aggregate unless agreed otherwise.
9.3 The Hirer will upon request of the Owner provide the proof of such insurance policy cover and evidence that all premiums due are fully paid.
10) Obligations Clause
This clause mentions the obligations of both the Owner and the Hirer such as; comply with all the terms and conditions of the agreement, notify the other party about all the risk to health and safety that can be caused during the event, maintain cleanliness and remove all the rubbish, ensure all the safety mechanism is complied with, observe all the safety precaution relating to COVID-19, etc.
11) Indemnification and Limitation of Liability Clause
In this clause, either party agrees to indemnify the other party from all claims, damages, liabilities, costs, penalties, losses caused due to any breach of obligations under this agreement, or termination due to default or negligence. The limitation of liability clause limits the liability of the party for any loss or damages caused due to negligence of the other party or for any indirect or consequential losses.
12) Advertisement and Publicity
Taj Palace is a grand and renowned hotel, it has a reputation to maintain, so any kind of advertisement or promotional activities has to be made only with the permission of the Manager or Owner.
12.1The Hirer will provide an opportunity to the Owner to approve all advertising for an Event prior to publication, in relation to the sponsorship agreement, use of the Premise name and logo and contact details and the overall look and fee.
12.2 No radio, television, or online broadcast, filming, recording, streaming or taping, or any type of electronic or digital transmission or recording of any kind whatsoever may be made at the Event with the prior written consent of the Owner.
In this clause, you have to mention who can terminate the agreement, the grounds for termination, the consequences of termination, and what clauses shall survive the termination.
14) Restriction of Entry and Intellectual Property Rights
This clause is important from the point of view of the reputation and goodwill of the Taj Palace Hotel. If the Owner is of opinion that any particular person is caught misbehaving or has entered into the premises without invitation, or the number of attendees or guests have exceeded the agreed number then, the Owner can refuse or restrict the entry of such person.
With regard to Intellectual Property Rights, the Owner has the right to all the recordings or broadcasts. In the event of any broadcast or recording of any kind has taken place at the venue, firstly it has to be made with the permission of the Owner and then the copy of the same has to be provided to both the Hirer and the Owner.
14.1The Hirer agrees that it will not invite or permit more than the agreed number of guests to attend the Event.
14.2The Hire shall not exceed the time limit mentioned in Clause ___.
14.3The Hirer acknowledges that the Owner may reject or refuse admission to any person who fails to behave in accordance with the standards required by this Clause. In which case the Hirer indemnifies the Owner to the fullest extent permitted by law for any claims that may be made against the Owner as a result of such action.
14.4The Owner may request proof of invitation or identification from each or any guest without which entry to the Premises may be refused.
14.5No radio, television, or online broadcast, filming, recording, streaming or taping, or any type of electronic or digital transmission or recording of any kind whatsoever may be made at the Event with the prior written consent of the Owner. A copy of such broadcast will be provided to both the Parties and both the Parties will have the right to such broadcast.
15) Dispute Resolution, Governing Law and Jurisdiction
Dispute resolution and governing law is very important clause as it gives a clear picture as to what has to be done in case of dispute, whether the dispute can be resolved through arbitration or through a suit and how the terms of this agreement can be enforced in the court of law and which court has the jurisdiction to hear the dispute. Lastly, you can mention the COVID guidelines in detail in the annexure at the end of the agreement. The agreement has to be signed by both parties along with two witnesses.
Venue Hire Agreement is an agreement that is entered between the Owner and the Hirer for conducting an event at the Owner’s premises. The essential clauses of this agreement are the purpose of use, payment, insurance, cancellation, Hirer’s responsibilities and dispute resolution. In a Venue Hire Agreement, you have to describe the venue or premises that are being hired in detail. Considering the pandemic situation, you also have to mention the COVID guidelines that are being followed by the Hotel and what the Hirer is required to follow. The agreement should also be drafted keeping in mind the interest of both parties, the language of the agreement should be simple and without any ambiguities.
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