Entering Into Contracts

How can I tell if the document I have been asked to sign is a contract, as defined by the Policy?

A contract is any document that 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 or accepted 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.

The identity of the other party has no bearing on whether something is a contract. 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.

What process should I follow before sending a contract to the Office of the General Counsel (OGC) for Review?

See Administrative Policy: Entering into Contracts. The following is merely a summary of that 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 Projects Administration.
4. If the transaction involves licensing or transferring University patents or confidential information, contact 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 available. 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 over $50,000 contact Purchasing Services.
7. 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 #6.)

(4) Review contract for business risk.

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.

NOTE: U-Wide Contracts may be used for the purchase of software, but the U-Wide contract is only with the reseller or store. Any license agreement for the software being purchased still must be reviewed by the OGC.

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.

1. Standard University Contracts generated automatically by Enterprise Financial System.
2. University-Wide Contracts [except for software].
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. The University's Purchase Order (PO) form must be used in all but exceptional circumstances. Using our PO form, you can simply enter into the contract, unless the contract is for a software license. 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.

What special considerations are there for software licenses, web applications, Software-as-a Service (SaaS) products, or other licensed technology products?

Many software and technology products or services are licensed to the University, not sold. This means the University is not purchasing the product or service, but is only being given a right to use the product or service. Standard University Contracts, including the PO, do not grant the University a license, and therefore should not be used in isolation to acquire these types of web- or cloud-based products or services. Instead, the Contractor form addendum should be used in conjunction with a Vendor’s license agreement, or otherwise adapted by the Office of the General Counsel, to ensure the University has the rights necessary to use the product or service.

What special considerations are there for off-site 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 (login required). 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 Administrative Policy: Information Security and Administrative Procedure: Identifying Security Level procedure. In addition, if the transaction involves software, vendor IT services or products that collect, transmit, process or store University data, ensure the Vendor/Supplier Management Standard of the Administrative Policy: Information Security is followed and web applications should be reviewed by the Office for Digital Accessibility.

What special considerations are there for purchasing computer hardware?

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.