PMM 6E Chp. 8

Question 1

Negotiations

Answer 1

Process in which people with shared interests, yet different goals, engage in an exchange of promises intended to achieve each party’s goals in the form of an agreement which is acceptable to all those involved.

Question 2

Concessions

Answer 2

Items in a contractual agreement where one party provides something of value to the other party in exchange for something else.

Question 3

Hard Costs

Answer 3

Relate to items or services that generate actual revenue collected by the property (i.e. guest room rates, F&B, room rental).

Question 4

Soft Costs

Answer 4

Costs which can be absorbed by a property without incurring undue additional expense (i.e. upgrades to suites, reduced rate for staff rooms).

Question 5

Contract (a.k.a. Letter of Agreement)

Answer 5

Agreement between 2 or more parties that creates in each party a duty to do or not do something and a right to performance of the other’s duty or a remedy for the breach if the other party fails to perform its duty

Question 6

Offer

Answer 6

A promise, proposal, or other expression of willingness to deliver specific obligations under proposed terms with another party.

Question 7

Acceptance

Answer 7

Indicated when the party receiving the offer signs the contract.

Question 8

Counter Offer

Answer 8

Recipient makes any changes to the offer before signing.

Question 9

Consideration

Answer 9

Refers to exchanging something of value between parties (i.e. the price paid for the offer). This is an essential element to forming a valid contract.

Question 10

Capacity

Answer 10

Defined as the legal qualification, competency, power, or fitness to enter into a contractual agreement (i.e. the person signing is legally authorized to sign that binds the party employing the signee

Question 11

Non-performance (a.k.a. Failure to Perform)

Answer 11

Defined as neglect or failure to carry out an agreement

Question 12

Actual Damages (a.k.a. Compensatory Damages)

Answer 12

Compensate for actual injuries or loss.

Question 13

Liquidated Damages

Answer 13

A reasonable estimation of actual damages to be recovered by one party if the other party breaches the contract

Question 14

Attrition

Answer 14

The difference between the actual number of sleeping rooms occupied and the number or formulas agreed to in the terms of the facility’s contract

Question 15

Cancellation Clause

Answer 15

A contract provision that outlines the damages to be paid to the non-cancelling party in the event of a breach of contract by the other party

Question 16

Force Majeure (a.k.a. Act of God)

Answer 16

Any disruptive occurrence that cannot be anticipated or avoided, relieving the parties of their obligation to perform the contract.

Question 17

Indemnification Clause (a.k.a. Hold Harmless Clause)

Answer 17

One party agrees to pay damages or claims that the other party may be required to pay to another.

Question 18

3 Most Common types of Business Insurance

Answer 18

General Liability
Professional Liability
Cancellation/Interruption