Printed on: 11/14/2018. Please go to http://policy.umn.edu for the most current version of the Policy or related document.
FAQ

Entering Into Contracts

Frequently Asked Questions

  1. How can I tell if the document I have been asked to sign is a contract, as defined by the Policy?
  2. What process should I follow before sending a contract to the OGC for Review?
  3. Where do I find Standard University Contracts and U-Wide Contracts?
  4. If the form I'm using has been reviewed by the OGC for a prior transaction, does it need to be reviewed again?
  5. What purchasing or software licensing contracts do not need to have OGC review?
  6. What terms and conditions of a purchasing or software licensing contract should I look at before sending the contract to the OGC?
  7. Why shouldn't I use the other party's form?
  8. What special considerations are there for off-site Web, Server, and Database hosting contracts?
  9. What special considerations are there for purchasing hardware and software?
  10. What special considerations are there for purchases with a financing lease?
  11. Who may sign a contract?
  1. How can I tell if the document I have been asked to sign is a contract, as defined by the Policy?

    A contract creates a legally binding obligation on the University. The title of the document makes no difference. For example, Purchase Orders and Quotes that have to be signed are contracts Contracts can be titled "memorandum of understanding," "letter of intent," "license," "non-disclosure agreement," or "agreement". Even easily over-looked transactions, such as “click-through” and “shrink-wrap” software licenses, such as with "SurveyMonkey," "Eventbrite," or "MailChimp" are forms of contracts. Often, the University has University-wide contracts with providers of such services that should be used instead of the "easy" providers. See Purchasing Services.

    Also, the identity of the other party makes no difference. The other party may be a commercial company, a non-profit group, an individual, another institution of higher education, governmental unit or any other type of entity.

    Note, however, that two units of the University of Minnesota cannot enter into a contract because it is impossible to sue yourself. To memorialize their mutual understanding for future reference, however, they may enter into a non-binding letter of intent. Such documents need not be reviewed by the Office of General Counsel.

  2. What process should I follow before sending a contract to the OGC for Review?

    See Administrative Policy: Entering into Contracts. The following is merely a summary of that Policy.

    See the Contract Process Flowchart in the Forms/Instructions section of the Policy. In brief:

    1. If the transaction is an external sale, contact the Office of External Sales.
    2. If the transaction involves a lease or use of University space or use of the other party's space, contact the Real Estate Office.
    3. If the transaction involves sponsored research, contact the Office of Sponsored Research Administration.
    4. If the transaction involves licensing or transferring University patents or confidential information, contact the Office for Technology Commercialization.
    5. If the transaction is not an external sale real estate, research, or technology commercialization matter, check the Standard Contracts Library to see if there is a pre-approved form you can use. If the other party wants to use their form, inform them that the University form must be used in all but extraordinary circumstances. See FAQ # 7.
    6. If the transaction is a purchase or license, and there is no standard form:

    (1) Determine if the contract is exempt from OGC review (See FAQ #5.)

    (2) If the contract is not exempt, see if there is a U-Wide Contract.

    (3) If there isn't a U-Wide contract, have the contract reviewed by the necessary reviewers outside the OGC, if any. (See FAQ #4.)

    (4) Review contract for "red-flag" issues (See FAQ #6.)

  • Where do I find Standard University Contracts and U-Wide Contracts?

    Standard University contracts can be found at the Standard Contracts Library.

    U-Wide Contracts can be found at the U-Wide Contracts library.

  • If the form I'm using has been reviewed by the OGC for a prior transaction, does it need to be reviewed again?

    If only the "business" terms, such as price, warranty, description of goods and services, delivery date, cost, or term, have been changed, generally, it does not need a second OGC review. If it has been more than four years since the prior OGC review, however, you may want to have it reviewed in case there has been a change in law or policy that might affect the contract.

  • What purchasing or software licensing contracts do not need to have OGC review?
    1. Standard University Contracts generated automatically by EFS.
    2. University-Wide Contracts.
    3. Contracts that the OGC has approved in the past, if only "business" terms have been changed.
    4. Contracts that are exempt from review by the office of the General Counsel. See Appendix: Checklist for Purchasing Contracts That are Exempt from Review by the Office of the General Counsel.
  • Who should review specific contract provisions before sending a contract to the OGC for review?

    See Appendix: Required Review by Subject Matter Experts.

  • Why shouldn't I use the other party's form?

    The University is a constitutional function of the State of Minnesota. Therefore, certain laws and regulations apply to our agreements that don’t apply to commercial enterprises. That is, commercial entities can generally simply decide what terms and conditions they want to accept; we cannot. Our PO form must be used in all but exceptional circumstances. Using our PO, you can simply enter into the contract. If the other party insists on using their form, Board of Regents Policy: Legal Review of Contracts and Transactions requires OGC review. That will substantially slow the contract process, and the end result will be a lot like our form anyway.

  • What special considerations are there for off-site "Software-as-a Service," "Cloud", Web, Server, and Database hosting or storage contracts?

    The first consideration is whether you want to spend money going outside of the University, or simply use the University’s Hosting Services. If you do chose to go outside the University, you should review the Information Security Questions for Contract Review and consult with University Information Security regarding the security standards necessary for the type of data involved. In particular, there are standards if the data include health information, student information, financial information, and other non-public data. See University’s Information Security Policy and Standards and Identifying Security Level procedure.

  • What special considerations are there for purchasing hardware and software?

    The University's Computer and Device Support can help with purchasing, configuration and deployment of devices and Peripherals.

  • What special considerations are there for purchases with a financing lease?

    Financing leases can be a useful way to make a purchase fit within a unit's budget. However, they should not be used without a great deal of thought. Financing leases are a form of debt, and may have tax, accounting, and other ramifications. Therefore, before the OGC reviews a financing lease, the OGC will confer with the University's Tax Management Office, which can add additional time to the review process. Also, because you are negotiating the lease with the financing company, you lose all ability to negotiate with the actual seller of the equipment. That is true even if the financing company and the seller are two parts of the same entity. Before using the seller's financing lease, you may want to consider using the University's internal resource Finally, note that the total expense of the lease must be less than $50,000, or the purchase must be referred to Purchasing Services.

  • Who may sign a contract?

    Under Board of Regents Policy: Reservation and Delegation of Authority, and Administrative Policy: President's Delegations of Authority, only those University employees to whom the authority to sign contracts has been expressly delegated in writing may sign contracts. See the Delegations of Authority Program website for a complete description of that process. To find who has the authority for any given contract, see the Delegations of Authority Search.

Document Feedback