Issue3 June 2005
HOSPITALITY BRIEFLY
In this issue:
WHAT'S COOKING?
High stakes in catering contracts
Many clubs and hotels outsource their food service operations
but fail to use properly drafted catering contracts to protect
their interests.
A properly drafted catering contract may help protect your interests
by:
- ensuring a new contractual relationship does not turn sour
due to misunderstandings; and
- avoiding disputes in an existing contractual relationship
where there is either no written contract or an inadequate
written contract.
Return versus risk
Although engaging a contract caterer may reduce your costs,
the tradeoff is an increase in risk that arises from the inherent
lack of control over a contractor when compared with an employee.
The following two case studies illustrate how a properly drafted
contract that imposes a reasonable degree of control over the
caterer could help you to protect your interests.
Case study 1
A club assumed its new caterer would supply and launder white
linen tablecloths in the club’s restaurant (as the club’s
previous caterer had done under an unwritten contract) and did
not include a specific provision to that effect in the new written
contract.
The new caterer did not supply white linen tablecloths and instead
proceeded to use plastic table covers.
Because the contract did not specify this obligation on the
caterer, the club had to bear the unexpected cost of supplying
and laundering white linen tablecloths.
Case study 2
A club set out to reduce labour costs and improve customer service
by allowing its contract caterer to serve liquor (as well as
food) to patrons. The existing written contract prevented the
caterer from serving liquor to patrons.
The club and the caterer negotiated a written variation to the
contract to allow the caterer’s employees to serve liquor
to patrons under strict conditions including a requirement for
the caterer’s employees to hold RSA certificates.
We strongly suggest you obtain legal advice before allowing
a caterer to serve liquor. Strict contractual conditions are
needed to help ensure the club does not break the law, which
requires the supply of liquor on club premises to be under the
control of the club’s board.
Contract ingredients
We suggest a properly drafted catering contract should include
these basic ingredients (not an exhaustive list):
- a start date and an end date (and a fixed option period if
desired);
- the caterer’s service obligations;
- an obligation on the caterer to hold adequate insurance
for public liability and workers compensation;
- a termination process if the caterer fails to perform its
obligations.
Contract preparation
You only need to send us a copy of your existing catering contract
or advise us on the basic ingredients you want included in a
written contract.
In preparing a contract we will suggest various specific provisions
that will impose a reasonable degree of control over the caterer
thereby helping you to protect your interests.
TASTY TIDBITS
No hidden agenda
Many clubs regularly review and update their constitutions to
reflect changes to legislation and promote good corporate governance.
We suggest it is good corporate governance for each club to
periodically update the wording of its notice of annual general
meeting (AGM) and business agenda to reflect current legislation
and the club’s constitution.
If your club has used the same wording in its notice of AGM
and business agenda document for many years, that wording may
be due for a change.
Please contact us if you would like a complimentary initial
review of your club’s current notice of AGM and business
agenda document.
In the great outdoors
Many clubs and hotels in NSW are building new ‘unenclosed
public places’ (e.g. beer gardens) to cater for their ‘smoking’ customers
from 2 July 2007.
If your club or hotel builds a new beer garden and wishes to
sell or supply liquor in that new area you must:
- apply to the Liquor Administration Board for approval to
change the boundary of the defined premises (for clubs) or
licensed premises (for hotels) to include the new beer garden;
and
- if you wish to allow a minor to enter and use the new beer
garden in the company of a responsible adult, apply to the
Licensing Court for approval to include that new area in the
non restricted area (for clubs), or the Liquor Administration
Board for approval to include that new area in the authorised
area (for hotels).
Please contact us if you need assistance in making these applications.
For further information about issues covered
in this Briefly, please contact Adam Jones on (02) 9023 0108
or E mail ajones@normans.com.au.
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© Norman Waterhouse 2005. All Rights Reserved.
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Norman Waterhouse
Lawyers
Adelaide
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