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Catering services agreement: How-to guide

Individuals and companies of all sizes hire caterers to provide food and other services for events. The events may range from small luncheons to large-scale wedding receptions. Caterers are hired for various reasons, including building a business image, increasing sales, or taking the pressure off a personal affair. For such events, a catering service agreement helps safeguard the interests of both parties during the agreed period. The parties can further discuss and finalize the agreement terms, including work parameters, payment, and responsibilities.

What are the key aspects to consider in a catering services agreement?

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Hiring caterers with service-specific group memberships

If you are looking for a caterer, consider those who are members of certain service-specific groups (e.g., National Association of Catering Executives). It can provide additional reassurance about their work with a strong presence in their industry.

A quick tip for growing your catering business: As a caterer, you always look for ways to grow your catering services. Consider joining catering associations. Find associations for catering services and their membership criteria. They may have information about running a catering business and contacts that could be essential for your continued growth.

Obtaining licenses and permits

If you're a caterer operating in a city or state, you may need to obtain multiple licenses and permits to run your business legally. These licenses could include catering, food handlers, building health, and alcoholic beverage permits if you serve alcohol.

It's important to remember that obtaining a business license can help you avoid hefty fines and set you up for long-term success. By taking the necessary steps to become a licensed business owner, you can feel confident and secure in your operations, knowing that you are operating legally and in compliance with regulations.

If you're looking to hire a caterer, ensure they have a business or food-related permit in your area. This is an excellent method of checking the reliability and stability of the person or company you hire.

Understanding the final cost inclusions

The cost of catering services may vary from company to company and event to event. It is crucial to remember that the company hiring a caterer may be charged for different items. Some standard additional charges may be included in the catering bill, such as delivery fees, chafers/chafing fuel, gratuity (if the caterer provides the personnel), sterno, flowers, aluminum water trays, stainless steel racks, linens, coffee, and cake. It is recommended that both parties clearly understand what is included in the final cost.

Checking the health code regulations

Check health codes to determine if any regulations apply to leftover food from events; otherwise, the hosts can decide how to handle it.

Reviewing state and local laws

Many states have laws requiring catering preparations only in approved kitchen facilities. Home kitchens often need more elements to be approved for commercial use. If you are starting your catering business, you may have to rent additional facilities for food preparation. It is good to review state and local laws for additional details about the requirements in your area.

Service expectations and payment terms

Before finalizing any agreement, it is vital to determine your goals first. Your agreement should include the following details at a minimum:

  • A clear description of the services provided by the caterer
  • The agreed-upon amount to be paid
  • The terms of payment
  • Deadlines for completion
  • The specific end products that are expected (if any)

Clarifying your agreement's terms and conditions before putting them in writing is crucial. It will help prevent future misunderstandings or disagreements.

Including relevant points

It is advisable to allow both parties to review the drafted agreement to ensure that all critical points are included. This will help to ensure that the terms and their effects on the agreement are understood.

Treating caterers as independent contractors

For reasons including requirements for health insurance coverage, liability, and taxes, a caterer must be treated as an independent contractor and not an employee of the individuals or companies it works for.

Reviewing state laws for independent contractors

Review the laws in your state that regulate independent contractors. Ensure that independent contractors are treated fairly and that their rights are protected according to the Fair Labor Standards Act by the U.S. Department of Labor. This gives the contractors some control over their work, thus creating a better work environment for everyone involved.

Signing the agreement

Once the agreement is drafted, the parties must sign two copies. The hiring party keeps one, and the other is given to the caterer.

At the end of its term, the parties can revisit its provisions and consider renewal options as required.

Engaging a witness or notary, if required

Depending on the nature of its terms, you may consider having your agreement witnessed or notarized to limit potential future disputes over the authenticity of a party's signature.

Contacting an attorney if needed

If your agreement involves significant risks and complex terms, contact an attorney to help draft a document that meets your requirements.

Understanding the clauses of the catering services agreement

An image of a restaurant waiter serving food on a tray to their customers.

The provisions below will guide you through the terms of the catering agreement, section by section, to help you better understand the process.

Introduction

This identifies the document as a catering services agreement. Write the date on which the agreement will become effective (often when it is signed).

In this section, mention the relevant details of the involved parties and, if applicable, what type of organization(s) they are (e.g., individual or company). The hiring party shall be addressed as the "company," and the caterer is called the "caterer." If someone is personally hiring a caterer (i.e., not as part of a business or other organization), they may be addressed as the "host," "purchaser," or by their name.

Recitals

This section contains crucial background information about the parties involved in the agreement. The recitals consist of a simple statement of your intention to enter a catering arrangement.

Responsibilities

This section lists each party's responsibilities under the agreement. The caterer agrees to perform the agreed-on catering services with adequate attention and care, and the company agrees to aid in this performance by providing necessary information and guidance. Also, the host must describe the location of the event or events to the caterer to facilitate their logistical and other event-related planning.

Nature of the relationship

This section explains the caterer's relationship with the company hiring them and that the caterer is not an employee or partner. The relationship clause is critical for legal reasons, including insurance coverage requirements, liability, and taxes. The agreement clarifies the importance of maintaining a clear distinction between independent contractors and employees. It's a good idea to review the laws in your state regarding independent contractors.

Representations and warranties

This section mentions the parties' promises under the agreement, which means that the parties agree to enter the deal based on the conditions listed in this section. (e.g., each can enter the agreement and satisfy its terms).

Compensation

Initial estimate: The company must complete an initial catering information sheet requesting the services for the event to the caterer. Once the caterer receives this sheet, they will provide an initial estimate of the cost of the services. Specify the time (before and after the event) for the company to provide the information sheet and for the caterer to submit the estimate.

Deposit: This provision requires the company to pay a deposit to secure the caterer's services reservation on the event date. This is ideal for a one-time service arrangement, with only one event being considered (i.e., not a long-term arrangement contemplating multiple events).

Final invoice: After the event date, the caterer is responsible for sending the host a final invoice reflecting all of the costs and expenses incurred for the event. The host must pay due amounts (i.e., not already included in the deposit or other payments) within a certain period. Mention the time frame within which the caterer must send its final invoice, and the host must remit its final payment.

No payments in certain circumstances: This section lists the circumstances under which the host will not make payments.

Taxes: Define the tax responsibilities here. For example, the caterer is responsible for paying its taxes on the money it receives (i.e., it is not receiving a "salary" as an employee of the company, and the company will not withhold those amounts on its behalf).

Number of attendees

Estimating the number of guests attending an event is complex and subject to various factors. This section provides a timeline for when the company will inform the caterer of the number of people attending the event. The company must also notify the caterer of how many children (under a designated age) will attend. It will factor into the quantity of food to be prepared and the cost.

Equipment

This section enables you to choose the best arrangement for your agreement.

For e.g., the parties agree that the company will provide specific equipment to enable the caterer to perform its duties under the agreement. The caterer must get all equipment(s) other than the items listed by the company. Even if the caterer decides to add some additional items to the event, they still have the option to pass on the cost to the company through their invoice, as long as it has been mutually agreed upon. However, the company is not obligated to procure these items on behalf of the caterer.

In some cases, the company doesn't provide equipment to the caterer, who must find it independently.

Term

This section suggests that the agreement will remain in effect until terminated or services are completed.

Termination

This section outlines the specific circumstances that would result in terminating the agreement before the services have been provided as required under the agreement.

The party seeking to terminate the agreement must give prompt written notice. Mention the notice period a party must provide for an earlier termination or to notify the other party of a breach.

Return of property

This significant provision details returning the property assigned during the agreement. Mention the period within which each party must return the other's property.

Indemnification

This section outlines each party's responsibilities in case of future issues and protects them from any adverse consequences arising from the other party's negligence or intentional misconduct.

Modification

This section indicates that any changes to the agreement are only effective if such changes are made in writing and signed by both parties.

Assignment

This section states that if either party wants to assign its obligations and interests under the agreement, it must first obtain the other party's written permission.

Force majeure

This section releases a party from its obligations if its performance is made impossible by an event beyond its control despite its best efforts (e.g., fire, flood, earthquake, strikes, war, and more). This release is effective only if circumstances prevent that party from completing its tasks.

No implied waiver

This explains that if either party allows the other to ignore or break an obligation under the agreement, it doesn't mean that the party waives any future rights to require the other to fulfill them.

Notice

This section provides instructions regarding sending official or legal correspondence. Provide the mailing address for both the company and the caterer.

Governing law

In this section, the parties can choose which state's laws apply to the agreement. It is crucial because the caterer and company may be based in different states, and the applicable laws could differ.

Counterparts; electronic signatures

This clause states that every part of an agreement is considered part of the same agreement, even if the parties sign it in different places or use electronic signatures like computers or fax machines. This is useful when the signing parties can't be physically together. It ensures that business can be done efficiently without affecting the agreement's authenticity.

Entire agreement

This section establishes and confirms the parties' mutual understanding that the document they execute represents a comprehensive and conclusive agreement regarding the matters under consideration.

Headings

This section explains that the headings at the beginning of each section are meant to organize the document. Any interpretation of the clauses should not be based on the headings.

Frequently asked questions

What's a catering services agreement?

Whether you need a caterer for a business event or a huge family celebration, the menu and food service can help to make or break the day. List the details with a catering services agreement so both parties know exactly what is expected on the big day. Create an agreement that caters to your event's menu and service needs.

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