Faculty Briefing
Contract Questions
College of Liberal Arts
August 15, 2011
Bill Woodward
Office of Counsel
X6633
[email protected]
How do I know if I am dealing with a
contract?
• Includes documents entitled: Contract,
Agreement, License, some Reservation Forms,
some Room Use Forms, some Price
Quotations, some Invoices, Leases, Equipment
Rental Forms
• If the document contains the word “agree,” it
is almost certainly a contract
What is the Office of Counsel’s Involvement?
• Provide legal review and counsel
– Officials whose names appear on the BOT
Contract Authority Resolution decide whether to
sign the contract or not
– Reviewed over 517 standard contracts FY 2010
– Reviewed over 300 non-standard contract FY 2010
– Reviewed over 40 construction contracts FY 2010
• Draft agreements
What is the Office of Counsel’s Involvement?
(continued)
• Prepare addendums to deal with “problem
clauses”
– Negotiate refinement of addendums to meet
vendor’s concerns where possible.
– If no one tells us the vendor has a problem with
an addendum, we have no way of knowing
– Problem: Vendor says “take it or leave it”
• Could lead to personal liability on the part of signer
What are some common contract
“problems”?
• Indemnification, hold harmless provisions
• Choice of governing law other than Alabama
• Exclusive venue for dispute resolution in
courts of another state
• Submission of the University to the
jurisdiction of a court
• Arbitration requirements
• Use of the University’s name/logo in
advertising by the other party
• Payment in a future fiscal year
What are some common contract
“problems”? (continued)
• Automatic renewals absent written notice so
many days prior to end of current term
• Reservation of the right to change the terms
and conditions at any time
• Requirements that the University accept
responsibility for damage caused by those
attending an event at a hotel
• Provisions calling for first class air fare, limo
service, 5 star hotels to vendor’s employees
What are some common contract
“problems”? (continued)
• Requirements that the University pay taxes
• Confidentiality provisions without an
exception that allows release required by
Alabama Open Records Act
• Bus charters without provisions relating to
liability insurance and driver qualifications
• Insurance requirements not met by the
University’s standing policies
How do I start the contracting process?
• Prepare a file containing legible copies of the
quotation, license agreement, etc.
• Complete the blanks
• Locate/include in the file legible copies of
documents referenced
• Indicate if for academic or research purposes
• Scan/email the package to [email protected]
– Fax to x6151 if you have no scanning capability
– Call x6484 if all else fails
– Purchasing will assign responsibility based on
“commodity”
• Prepare/submit requisition
• Start early
Do I really need to read the
contract?
• Most written contracts will have a clause
providing that it contains all of the matters
agreed to by the parties and supersedes any
oral or written understandings reached
previously
– Be certain that all of the matters important to you
have been included in the written agreement
Does the Competitive Bid Law (CBL) apply?
• CBL threshold is $7,500
– Can’t fragment purchases within a fiscal year to
avoid CBL application
• Exceptions include:
– Goods: Sole source
– Services: Personal services of individuals
possessing a high degree of professional skill
where the personality of the individual plays a
decisive part
• Noncompliance leads to null and void contract
• It can be faster to use CBL process than to use
sole source
What is a sole source item?
• Goods/ services offered must be unique.
• Uniqueness must be substantially related to
the intended purpose, use, and performance
of the goods/ services sought.
• Other similar goods/ services cannot meet the
desired objectives of the entity seeking the
goods/services.
• No “gold plating”
When can I use a Professional
Services Contract?
• Using a Professional Services Contract is only appropriate if
the individual being hired is an independent contractor, not
an employee. Independent contractors pay their own
Social Security, make their own quarterly estimated income
tax payments, and provide their own insurance and
retirement benefits, if any.
• Employees work under the control and continuing
supervision of the University while independent
contractors are given a task and perform on their own.
• The Professional Services Contract (with Terms and
Conditions is on-line at:
http://www.uah.edu/admin/bussvcs/Contracts/Professiona
l%20Services%20Contract-General%20Terms.pdf
What happens if the Professional
Services Contract is used
inappropriately?
• Using the Professional Services Contract form
is not determinative
• If the University misclassifies an employee as
an independent contractor, it is subject to
fines and must pay the withholding which was
not collected from the employee’s salary.
• Consider part-time or on-call employment
status
Are the documents legible?
• Try to get vendors to scan original documents
and email them to you.
– Helps insure legibility
– Can make it easier to send information to
Purchasing or OOC more quickly and easily
• Faxes are discouraged. Second and later
generation faxes are almost always either
illegible or not comfortably legible. This slows
down processing.
Does the contract refer to other
agreements, documents or websites?
• If there are references to other agreements,
documents, or websites, they should be
found, printed, and made a part of the
contract package
– Failure to do this will slow processing
How can I use a software “education
license”?
• Education licenses are offered at a price
discount or, on occasion, at no cost
• The trade-off is that the use of the software is
typically restricted to use for education
purposes with commercial use specifically
prohibited.
• If “donated,” vendor may well say “take it or
leave it” when an addendum is proposed to
deal with sovereign immunity issues
What are some of the common
restrictions in software licenses?
• Education use only
• Limit on number of installations, if not a site
license (audit rights to enforce)
• Limit on number of simultaneous users (audit
rights to enforce)
• Requirement to have individual users agree in
writing to abide by the terms of the
University’s license
• Requirement to appoint a license
administrator in writing