This article appeared in the July 2018 issue of Club Life.
The appointment of a contract caterer is a very important matter for any club. The Board of Directors and management need to decide what it wants from the appointment. For example, how will the contract caterer fit in with other club activities such as functions and other special events?
After the Board has determined that it wishes to appoint a contract caterer the next thing to do will be to have a contract prepared. The contract needs to be prepared by a lawyer who is skilled in the drafting of commercial agreements and is familiar with the legislation surrounding these types of agreements.
A club needs to consider a variety of matters and provide instructions in order for the contract to be prepared. Some of those matters include:
- What is the term (length of the agreement)?
- Will there be an option in the club’s or caterer’s favour to renew the agreement for a further term?
- Is the caterer to pay any fee for being given the right to provide catering services to the club? The fee should not be referred to as a rent or a licence fee.
- What equipment will the club be providing and what equipment, if any, will the caterer be providing?
- Who is to maintain, repair and if necessary replace the equipment?
- What standards for food and service need to be included in the contract?
- What type of insurances is the caterer to provide, for example Public Liability Insurance and Workers Compensation Insurance?
- What indemnities are to be provided by the caterer?
- What areas of the club will the contract caterer be operating from?
- Who is to be responsible for cleaning the catering area?
- Will the caterer be required to seek the club’s consent before changing menus and increasing menu prices?
- What will be the contract caterer’s minimum trading hours?
- Will the caterer have the right to provide the catering for all functions held at the club or only specified functions?
- What services and utilities (for example water, gas, electricity) will be provided to the caterer and who will be responsible for paying for the services and utilities?
- What rights to terminate the contract are to be included? Can the club terminate the contract by giving a set period of notice for example three months’ notice of termination?
- Will the caterer be able to transfer the contract and if so what conditions will the caterer need to meet in order to obtain the club’s consent to such a transfer?
- Is the catering contractor a company? If so, who are its directors? Does any director have a pecuniary interest in the contract? Is there any director who has a material personal interest in the contract?
- How will disputes be dealt with under the contract? Will they be referred to expert determination prior to any court proceedings?
The above list is not exhaustive but indicates the sort of information that clubs must consider.
Once the draft contract has been prepared it should be closely reviewed by the Board of Directors and management or a separate committee delegated that task by the Board of Directors.
If the Club has not already done so, we recommend that a club should then call for tenders from prospective contract caterers. We also recommend that clubs follow the ClubsNSW Guidelines in relation to tenders during the tender process.
For more information please contact Bruce Gotterson on 8251 7777 or at b.gotterson@pigott.com.au.
This article is intended to provide general information in summary form on a legal topic, current at the time of publication. The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.