Understanding Your Tradeshow Contractual Relationships

Tradeshows are a multi-faceted endeavor. Show management wants a smooth overall production of the tradeshow for the benefit of the exhibitors. The official services contractor is focused on getting the show in and out on time in a safe manner. Exhibitors are concerned about getting their booths set up and making a favorable impression to attendees. Everyone is working towards getting to the finish line and celebrating another successful show. But what happens if the exhibitor’s materials are lost in transit or damaged during set up? Who is responsible if a booth wall falls onto an attendee? Does an exhibitor have recourse if show management reassigns the exhibitor’s booth to a less favorable location at the last minute?

In the months leading up to a tradeshow and even on show site there are numerous contracts entered into between the various entities involved in the show. But does anyone actually read those contracts to understand what is being agreed to? This article explains the various contractual relationships existing at most tradeshows and examines some of the legal implications to the parties.

Tradeshow relationships can be viewed in terms of a hierarchy. At the top is the venue owner who leases the facility to show management. Show management typically hires an official services contractor who can provide drayage, booth installation, decorating and customer service. Show management also rents booth space to the exhibitors. The official service contractor provides various show site services to exhibitors through the use of order forms. Exhibitors may also employ exhibitor appointed contractors (“EACs”) to build their exhibit booths. Official service contractors and EACs submit Right of Entry Agreements to the venue owner in order to work on the premises. Each of these relationships involves a contract that sets forth the rights and obligations of the parties. Common provisions in each of those contracts include the following:

Indemnification. Indemnification is a tool used to shift loss from one party to another. Indemnification requires the indemnitor to hold the indemnitee harmless from losses or damages that arise out of the indemnitor’s acts or omissions as spelled out in the contract. The venue owner can generally look to show management and any contractor on show site for indemnity based upon the lease and right of entry agreements. Show management typically includes language in its agreements with the official service contractor and the exhibitors that requires them to indemnify show management and possibly the venue owner. Official service contractors have indemnity obligations upwards to the venue and show management but can look downward to the EACs and exhibitors for indemnity based upon the language in their order forms and terms and conditions found in the exhibitor kits.

The practical implication of this hierarchal relationship is that an exhibitor may face multiple demands for indemnification in the event of a loss involving an exhibitor’s employee or occurring in its booth. Exhibitors rarely have indemnity rights against other entities at the show. One area where exhibitors can protect themselves is to ensure that they contractually require their EAC to indemnify the exhibitor for the EAC’s conduct. All parties should understand the extent of their indemnity obligations so they do not unnecessarily agree to indemnify another for a loss that is beyond the scope of the agreement.

Insurance. Most of the contracts referenced above will contain an insurance provision. These provisions require that one of the contracting parties carry general liability insurance and workers’ compensation insurance in certain specified amounts. In addition, venue owners, show management and official service contractors require those below them in the hierarchy to name them as additional insured on the insurance policies. This allows claims to be made on other parties’ insurance policies in the event of a loss. Failure to name an entity as an additional insured as required can result in a breach of contract suit months or even years later. Often times there are mutual obligations to name each other as additional insureds which can lead to confusion regarding whose obligation is primary.

Exhibitors should review their space rental agreement with show management as well as the exhibitor kit provided by the official services contractor to determine the insurance requirements. Official service contractors need to be aware of the insurance requirements contained in their contract with show management and in the Right of Entry agreement with the venue. One of the most difficult tasks faced by official services contractors is the collection of certificates of insurance from EACs working on the show which name the official services contractor and show management as additional insureds. Failure to collect those certificates of insurance can result in the loss of the ability to make a claim on the EAC’s insurance policy which can be a costly mistake. Exhibitors should ensure that their EACs provide the requisite certificates so that the exhibitors do not have to step into the shoes of the EAC should there be a loss.

Damages limitations. Damages limitation provisions are another way for parties to limit risk. Tradeshow-related contracts often contain language limiting or excluding the recovery of lost profits or consequential damages resulting from a breach of the contract. In situations involving lost or damaged goods the official services contractor may limit the exhibitor’s damages to a specific amount per item regardless of its actual value. Examination of the terms and conditions may reveal ways in which the exhibitor can increase the value of its recovery in the event of lost or damaged goods or challenge the validity of the limitation.

Choice of law and venue. Oftentimes tradeshow entities find themselves dragged into litigation in a state other than their own or applying law of a state other than where the loss occurred. This can be the result of a contractual provision where the parties stipulate to a particular venue or state’s law to resolve disputes. Typically this will be the venue or state where the party that drafted the contract is headquartered. Thus, a Texas-based exhibitor that participated in a show in Chicago may be forced to defend a suit in Pennsylvania because that is where show management is based.

Venue and choice of law provisions are generally enforced by the courts absent circumstances dictating otherwise. This can result in increased litigation costs because witnesses may not necessarily be located in the venue where the lawsuit is pending. Parties should review venue and choice of law provisions to determine whether there are grounds to challenge them or can be negotiated to a more favorable venue.

Each entity that participates in a tradeshow is in a different position than the other participants. In order to understand the relationships, rights and obligations it is imperative to review the various tradeshow contracts that exist before they are signed as well as when a claim is made or a loss occurs. Depending on the nature of the claim or loss, it may be possible to shift some responsibility to another party or avoid liability altogether.