CCEP Contract Negotiation 2 — Questions and Answers
Question 1: What does an 'attrition clause' in a hotel contract typically address?
- The penalty for canceling the event entirely
- The minimum percentage of contracted room block that must be filled to avoid penalties (Correct answer)
- The process for resolving disputes between the planner and venue
- The timeline for submitting the final attendee count
Correct answer: The minimum percentage of contracted room block that must be filled to avoid penalties
An attrition clause specifies the minimum percentage of a contracted room block (or food & beverage minimum) that must be consumed, with financial penalties if the group falls short.
Question 2: Which negotiation strategy involves making a high initial demand to leave room for concessions?
- Good cop/bad cop
- Anchoring (Correct answer)
- BATNA positioning
- Nibbling
Correct answer: Anchoring
Anchoring involves setting an extreme first offer to shift the negotiation midpoint in your favor, giving you room to make concessions while still achieving a favorable outcome.
Question 3: In contract law, what is 'consideration'?
- The courtesy shown between negotiating parties
- Something of value exchanged by each party to make a contract legally binding (Correct answer)
- The time allowed for reviewing contract terms
- The governing law clause within a contract
Correct answer: Something of value exchanged by each party to make a contract legally binding
Consideration is the exchange of something of value (money, services, promises) by each party, which is a fundamental requirement for a contract to be legally enforceable.
Question 4: What is a 'force majeure' clause designed to do?
- Force venues to honor discounted rates during peak season
- Excuse parties from contract obligations when extraordinary events beyond their control occur (Correct answer)
- Require major vendors to provide backup services
- Mandate that the stronger negotiating party bears all financial risk
Correct answer: Excuse parties from contract obligations when extraordinary events beyond their control occur
Force majeure clauses excuse one or both parties from contractual obligations when unforeseeable events—such as natural disasters, pandemics, or government restrictions—make performance impossible.
Question 5: When negotiating food and beverage minimums with a hotel, which approach gives the planner the most flexibility?
- Accepting the hotel's standard minimum without discussion
- Negotiating the minimum as a combined total across all events rather than per-event (Correct answer)
- Requesting that the minimum be calculated at retail menu prices
- Agreeing to a higher minimum in exchange for complimentary AV
Correct answer: Negotiating the minimum as a combined total across all events rather than per-event
A combined total F&B minimum across all events allows the planner to shift spending between functions to meet the threshold, reducing the risk of attrition penalties on any single event.
Question 6: What is the primary purpose of including an indemnification clause in an event contract?
- To set payment schedules and deposit amounts
- To allocate financial responsibility if one party's actions cause harm or loss to the other (Correct answer)
- To define the scope of services to be provided
- To establish the governing jurisdiction for disputes
Correct answer: To allocate financial responsibility if one party's actions cause harm or loss to the other
An indemnification clause specifies which party will bear costs and legal liability arising from claims, lawsuits, or damages caused by their own actions or negligence.
Question 7: A planner is negotiating with a venue that has a 'right of first refusal' clause. What does this mean?
- The venue can refuse the planner's event for any reason
- The planner must give the venue the first opportunity to match a competing bid before going elsewhere (Correct answer)
- The venue has the right to cancel the contract if a more profitable client emerges
- The planner can refuse venue-mandated vendors without penalty
Correct answer: The planner must give the venue the first opportunity to match a competing bid before going elsewhere
A right of first refusal gives one party (often the planner or venue) the opportunity to match any competing offer before the other party accepts a deal with someone else.
CCEP Contract Negotiation 2
What does an 'attrition clause' in a hotel contract typically address?