The event industry is a fast-paced and exciting industry which often requires its stakeholders to deal with customers and suppliers on a moment's notice. In the excitement of organising an event – be it a music festival, a social gathering or a sporting tournament – often the eye is on the end product rather than the mundane world of contracts and legal requirements.
This can result in some of the most basic aspects of an engagement being overlooked. How much is this going to cost? When does that need to be paid? What exactly am I being provided? The list goes on.
One of the most basic questions which is often overlooked – and which is the most likely to cause you problems down the road is the most basic question of all....who exactly am I dealing with?
In a space where there are multiple layers of participants, from the end customers, through managers and planners, down to suppliers, it can often get lost who exactly a party is dealing with. If things go well, this often never becomes a problem but if things go pear shaped, it is a simple question – which if answered correctly at the start – can save you a lot of time and heartache.
To solve this problem, stakeholders need to turn their mind to two basic questions – Is my contact the end customer/supplier and who are they?
The former is often answered through transparent and direct communication. With event planners becoming a more common element of events, it is often not clear exactly who will be responsible for the final account and/or provision of goods and services. We often find that in events-related disputes that a "blame game" starts where the parties have not been clear on who is ultimately responsible under the transaction. It is often not until we become involved that the proper party responsible is identified and unnecessary delay and costs can be incurred in these circumstances.
To avoid this, ask the question, who is my customer/who is the service provider? When dealing with a customer who is booking services, ask them "are you acting as agent for someone or are you the customer". If they are acting as agent for a customer, ask for proof of their authority and/or have the end customer confirm the request/order. If they are co-ordinating with suppliers, confirm if the planner is sub-contracting services or booking services on your behalf. From a planning perspective, make it clear to all involved what your role is.
Once this is established, the next question you need to ask is, who am I dealing with? Often a party to a transaction will use their business name. It is important to understand that this is not a legal entity. Whilst you may be able to sue a business name in some jurisdictions, the reality is that you need to pull the curtain back and understand who stands behind the business name. Are they a sole trader, a partnership, a corporation or even a trust? This will help you assess risk. For instance, if a business is being carried on by a corporation with little capital, it may be wise to ask for personal guarantees. This will also assist you in assessing their solvency, particularly if dealing in larger transactions which don't command payment upfront.
To identify a party, a great starting point is often the ABN. You can search the ABN on ABN Lookup which is the public view of the Australian Business Register. This will tell you who is carrying on a business. You can then make further enquiries with the other party (for instance, who is the trustee) and you can also conduct credit checks through one of the many credit reporting agencies to ascertain their solvency and status. Of course, there is no silver bullet to avoiding trouble, but by adequately identifying the party you are dealing with, you can at least make an educated decision about entering into a transaction and hopefully, save yourself some stress should things not pan out as you had hoped.
Key Takeaways:
- Always identify who the end customer is and/or if you are a planner, make sure you clearly stipulate your role in any transaction;
- Ensure there is some form of detailed engagement documentation which clarifies the parties to the transaction, the costs involved and the expectations of both parties;
- Identify the details of the other party by searching the Australian Business Register and if required pay for a more detailed search of any corporation, trust, business name; and
- Check the other party's credit history to assess risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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