ASAE Pushes Back Against Controversial Laws with Force Majeure Contract Clause

Salt Lake City, UT —The board of directors of the American Society of Association Executives (ASAE) unanimously approved new diversity and inclusion initiatives at the group’s annual meeting in Salt Lake City in July. Those initiatives include a new anti-discrimination clause for future ASAE meeting contracts with hotels and convention centers.

The clause invokes force majeure protection to cancel a meeting if state or local laws or regulations are passed that result in discrimination based on race, religion, gender, sexual orientation, disability, etc. (See specific contract language below.)

The intent of the new clause is to “protect ASAE against possible discriminatory legislation that might threaten the success of a planned meeting or convention,” according to a statement issued by the board. “Associations cannot afford the reputational risk of being associated with or doing business in jurisdictions that are perceived to be discriminatory.”

ASAE President and CEO John Graham said the board was moved to take these actions in light of controversial legislation proposed or passed in several states over the last year (most recently in North Carolina) — legislation that results in discrimination against lesbian, gay, and bi/transgender people, he said.

“At the end of the day, we can’t support laws or regulations that deny people, for whatever reason, public accommodation, whether it’s a table at a restaurant or the ability to order a cake from a bakery,” Graham told TSE. “This is a business decision.”

Redefining Force Majeure

Force majeure contract clauses originally were narrowly applied, mostly to “acts of God,” such as hurricanes and other natural disasters. But these days, “planners have a tendency to want to throw everything but the kitchen sink into a force majeure clause,” said Tyra Hilliard, PhD, JD, CMP, a specialist in legal issues in the hospitality industry and a frequent industry speaker on the topic.

“I believe this [ASAE clause] is well beyond what force majeure was intended for, but it’s probably the best way to address the issue in contracts,” Hilliard said. Most associations, nonetheless, will find negotiating an anti-discrimination clause like ASAE’s to be a serious challenge, she added.

“Suppliers have little control over laws or regulations passed by city or state governments. Because of this, suppliers probably feel they are being asked to take on a risk that they are unable to mitigate,” Hilliard said. “For the best chance of success, I encourage planners to include the issue in the RFP stage. Let hotels and convention centers know that you are only willing to consider properties that will accept this condition. That will save a lot of futile negotiations.”

The groups that are likely to have the most success negotiating this type of clause are those whose purpose centers around diversity and inclusion, she said. “For example, the NAACP or the National Council of La Raza have firmer ground to stand on to say that racially discriminatory legislation frustrates the purpose of their meeting than does the American Widget Makers Association.”

Making a Statement

ASAE’s Graham does not necessarily disagree with the points raised by Hilliard. “Adopting an anti-discrimination clause like this is meant to make a statement as much as anything,” he said. “Part of what we are trying to do is to help our hospitality and CVB partners advocate by showing what the ramifications of these types of laws could be.”

He acknowledged that some associations would indeed have a tough time incorporating an anti-discriminatory clause similar to ASAE’s into their contracts. “For ASAE, public accommodation for all is core to our mission. That’s why we’re taking this stand.” He also stressed that ASAE does not advocate boycotts “because boycotts don’t affect legislators but have a big impact on everyone from restaurant and hotel workers to cab drivers.”

But just as more and more corporations are speaking out on social issues (Apple, Starbucks, and Marriott, to name a few), so are a wide range of associations — not just those whose core mission revolves around diversity and inclusion.

“I read the release regarding ASAE’s recommended anti-discrimination contract language and immediately agreed with its intent,” said Megan Tanel, CEM, Senior Vice President, Association of Equipment Manufacturers (AEM). AEM trade shows include CONEXPO-CON/AGG and World of Asphalt.

“We are reviewing our contract language for hotels and convention centers and plan to include some reference regarding lack of tolerance or discrimination based on religion, gender, race, and other factors,” Tanel said. “From AEM’s perspective, we are in full support of adding a clause with similar intent [as ASAE] and conducting our business with this mindset.”

The Legalese:

ASAE’s Anti-Discrimination Contract Clause

“It shall be considered an incident of force majeure and thus relieve Event Sponsor of any obligation to Property under this Agreement, including but not limited to waiver of any cancellation or attrition penalties, and Event Sponsor will receive in full a refund of any amounts paid to Property pursuant to this Agreement, if, at any time between the effective date of this Agreement and the beginning dates of Event Sponsor’s event, Event Sponsor provides written notice to Property of cancellation of this Agreement based upon any state or local government arm, including a legislature, board or agency in the jurisdiction of the Property, having enacted legislation or regulation that has the effect of:

1.  Repealing existing legal protections or prohibiting the passage of legal protections for Subject Individuals;

2.  Allowing discrimination against Subject Individuals in employment, housing, or public accommodations or services; or

3.  Prohibiting Subject Individuals from accessing facilities (including, but not limited to, restrooms), where “Subject Individuals” are those identified in the legislation or regulation based on race, color, religion, national origin, age, marital status, personal appearance, sexual orientation, gender identity, family responsibility, political affiliation, or disability.”

Source: The American Society of Association Executives