Hosting a third-party event provides ample opportunities for financial and marketing gain. But those benefits can be offset and even eliminated if the risks aren’t managed and shifted properly. A single incident, especially a catastrophic one, can take the fun out of hosting in an instant. Third-party host contracts are a best management practice to shift or eliminate such risks.
When considering such contracts, begin with the age-old questions of “what, when, where, who, how, and why.” Endurance competitions provide a great example. They are marketed to include the risks involved, and they are increasing in popularity. Reducing or eliminating risk in such events seems contradictory to their intent, yet is necessary for the host resort. Let’s consider what that involves.
Always Ask “Why?”
The question of “why” is often the first one asked. Why does the ski area want to host this event on its property, and what gain will be received? If there are financial or marketing parameters, those need to be built into the third-party host contract. If there is a financial contribution by the ski area, then the terms must be defined. Recovery of anticipated gains, let alone investment, must be addressed if, for instance, the event fails or does not take place.
Use and control of the ski area’s intellectual property, trademarks and logos should also be addressed. If the third party is in charge of marketing or advertising, then some review, control or approval should be considered, especially if using the ski area’s intellectual property.
The question of “why” must be considered from the perspective of the third party as well. Why are they coming to your property, and in hopes of what gain? Are they and is it a worthy and appealing third party and event to add to your brand?cont.
Lastly, the third party will no doubt have its own sponsors. The ski area needs to assess its sponsorship contracts to avoid conflicts or contractual violations.
Who and How
The subjects of “who” and “how” are perhaps most important and inseparable. The issues are duty and obligation. A fairly common example: a third party will be hosting an extreme endurance event on your property, including deep water dives, mud pits, climbing and jumping, and electricity. Who will actually be constructing the obstacles? Are they insured?
Some event hosts “hire” volunteers to build obstacles. What comfort do you have in their skill, training and competence? Who will be providing medical services, and what personnel will they use? Will an ambulance service be needed on-site? Will they be using your patrol or health care facilities, and if so, who is contractually obligated to direct and control? Who is providing supplies, whether beverages, bandages, transportation or otherwise? Is a dive team needed, and who is responsible for retaining the dive team? Who is responsible for ensuring the appropriate licensing or certification for all those providing rescue, health care, or medical services?
The “who” also extends beyond the ski area and the third party putting on the event to the subcontractors and vendors. Are they being hired by the ski area or the third party? Who is responsible for ensuring they have the appropriate licenses, insurances (i.e. workers’ compensation) and other mandated requirements? How will that be monitored and verified? Will the ski area receive copies of contracts, certificates of insurance, etc.?
Who Indemnifies Who?
Importantly, who will be obligated to indemnify who? If the ski area is merely providing the property but is not responsible for putting on the event, then indemnification should reflect its lessened duties and obligations. And, of course, indemnification must include insurance, and insurance that will adequately cover the indemnification obligations. A $500,000 maximum policy limit should not rest easy with a ski area if, for example, an endurance competition runs multiple events across the country.
First, start with a conversation with your own carrier and what they wish to see. Be sure you are covered, too.
Second, avoid the uncertainties represented in a Certificate of Insurance, such as aggregate versus per-incident coverage; be named an additional insured on the policy, and get proof of such. Being an additional insured is much more comforting than merely being given some sort of Certificate of Insurance. Generally, the added cost to be named an additional insured is not significant, so any pushback from the third party should not be accepted. The cost to you in the event of an incident, let alone a catastrophic one, will be much more than the cost to the third party to name you an additional insured.
Lastly, continue the discussion of “how” internally with your own staff. How you conduct yourself during the course of the event, including setup and take down, are likely defined within the terms of the third-party contract. As is often said, “stay within your box.” If you step into the obligations of the third party, you accept obligations and duties unnecessarily, and increase your exposure. If the contract provides that the third party is responsible for all medical and healthcare at the event, do not intervene.
Instead, have conditions in the contract that the ski area can curtail, limit or even shut down an event if it believes, in its sole discretion, that there are safety concerns, violations of contract, improper licensing or certification of vendors or subcontractor, etc. It’s your playing field, after all.
What, When, and Where
The “what” may seem obvious, but be aware that this includes the construction and preparation involved as well as the event itself. Who will be responsible for any construction or preparation for the event, and for returning the property to its original state—for instance, building and later removing staging or scaffolding, as well as equipment involved in the event? It’s not uncommon for an understaffed, under -or un-paid or disgruntled third-party contractor/vendor to up and leave before its job is done, leaving the responsibility to the third party putting on the event —who, itself, may have long since departed.
Restoring the property to its original state is especially important if you are on state or federal/Forest Service land. Consider holding a deposit until all is restored to your satisfaction, and the satisfaction of any government agency.
“When” obviously focuses on the event start and end dates. But “when” is actually much more broad than that. The third party putting on the event, and its subcontractors and vendors, will arrive before the start date, and (hopefully) remain after the end date as well. When will the construction begin, and when will the property be returned to its original state? The entire duration of their presence must be accounted for when addressing risk.
The “where” is also easy to define; the event will be on the ski area property. However, many ski areas are located on property they do not own, such as state or Forest Service land or leased land. The ski area may have contractual obligations in its lease or land-use permits.
For instance, is there an obligation that the actual landowner is insured and indemnified? If so, what is the ski area doing to shift its obligations to the host of the event? The ski area must also have a clear understanding of what property the third party host will need, including on-hill, parking, lodging, and otherwise.
Another example: many third parties bring in RVs and mobile homes to host sponsors and house staff. What are the needs and restrictions for that “housing,” and what security is required or needed? In most states, landowners are responsible for what occurs on their property, regardless of who runs an event. Knowing exactly all planned locations is an important consideration.
These considerations may seem exhausting, extensive or unnecessary, especially for the simplest of events. But even hosting something as seemingly benign as a yoga convention exposes the resort to trips and falls, food poisoning [maybe from a vendor’s food] or other unanticipated consequences. The injured party may or may not know the host of the event, but he or she will certainly remember where they were for the event.
Formulating a sound and comforting third-party contract not only benefits the ski area but clearly defines each party’s role. Once that contract is completed, the ski area has a template from which to work forward, with much greater peace of mind.