Entering Into Contracts

University contracts define the rights, commitments, and expectations of the University and the other party, help prevent misunderstandings by clearly outlining terms and conditions, and safeguard the University’s legal, financial, and operational interests. Only those individuals with proper delegated authority may enter contracts on behalf of the University and they must ensure that risks are assessed and managed prior to entering into the contract.

Scope

This policy applies to all contracts, including but not limited to: purchase agreements for goods or services, leases, licenses, use agreements, memoranda of understanding, and program agreements. $0 agreements, click-through agreements and online licenses may constitute contracts if they include obligations binding the University.

Delegation of Authority Requirements

In accordance with the Board of Regents Policy: Reservation and Delegation of Authority and Administrative Policy: President's Delegations of Authority, an individual with delegated authority to enter a University contract must:

• Act within limits of delegated authority — Sign contracts only if they are within the scope, financial limits and subject matter defined in the delegation. No contract signed by an individual lacking delegated authority will create any obligation for the University. Unauthorized signatures may subject the individual to personal liability or disciplinary action.
• Understand the Contract — Read and comprehend all terms and conditions. Ensure it is accurate, for a proper purpose, in the best interests of the University and advances its mission.
• Assess Risks — Evaluate legal, financial, operational and reputational risks before signing (see Appendix: Assessing Risk in the Business Terms of a Contract).
• Avoid breach of contract — Have practices in place to ensure the contract terms do not conflict with existing University contracts (for example, the University has an exclusive beverage provider and there may be exclusive arrangements and campus-wide obligations in athletic facility naming agreements). Consult with Subject Matter Experts as needed.
• Seek Expert Advice — Consult the appropriate subject matter experts to identify risks, confirm compliance requirements and obtain any required reviews (see Appendix: Required Review by Subject Matter Experts).
• Mitigate Risks — Confirm that the contract does not create an unreasonable risk to the University’s mission, reputation or funds, and verify that the University can meet its contractual obligations.

No contract signed by an individual lacking delegated authority will create any obligation for the University. Unauthorized signatures may subject the individual to personal liability or disciplinary action.

Business Risk

Units must not enter into a contract that exposes the University to unreasonable risks. Before proceeding, units should consider the likelihood that a risk will occur, the potential impact if it does, and the most severe realistic outcome. (See Appendix: Assessing Risk in the Business Terms of a Contract.) Ultimately, it is the responsibility of the individual with delegated authority to enter the agreement to confirm the contract does not create an unreasonable risk to the University’s mission, reputation or funds. Evaluation of business risk does not negate other aspects of this policy that require subject matter expert review and legal review.

Required Subject Matter Expert Reviews

Certain contracts must be reviewed by the University unit responsible for compliance or expertise in a particular subject matter. If a contract includes provisions that require subject matter review (for example, insurance, use of University trademarks or data security), units must contact the appropriate Subject Matter Expert as listed in the Appendix: Required Review by Subject Matter Experts before submitting the contract for legal review.

Legal Review

Before a contract is signed, a unit must do one of the following to manage legal risk:

• use a Standard Contract;
• use a contract that has been approved by the Office of the General Counsel (the “OGC”);
• use a contract (including a form written and proposed by a vendor or the other party) that is exempt from legal review in accordance with (i) a checklist or instructions established by the OGC, (ii) a contract review procedure approved by the OGC, or (iii) other criteria for exemption established by the OGC; OR
• submit the non-Standard Contract to the OGC for legal review.

See Appendix: Checklist for Purchasing Contracts that are Exempt from Review by the Office of the General Counsel.