University College Cork
Office of Corporate and Legal Affairs
Negotiating Contracts – Basic Principles
Hilda O'Keeffe
University Solicitor
31st May 2011
Presentation by Hilda O'Keeffe, 31 May 2011
Introduction
While all reasonable care has been taken in the preparation and
completion of this documentation, no responsibility is undertaken for
any errors and/or omissions
This documentation has been prepared for information purposes only
and does not constitute legal advice.
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Presentation by Hilda O'Keeffe, 31 May 2011
Basic Principles

What is a Contract?
 Essential Elements of a Contract
 Verbal and written contracts
 Capacity to Negotiate and Contract
 Negotiating – Subject to Contract
 Indemnities, Warranties and Insurance
 General and Boilerplate Clauses
 Tips and Traps
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Presentation by Hilda O'Keeffe, 31 May 2011
What is a Contract?
Presentation by Hilda O'Keeffe, 31 May 2011
Background
A Contract may be defined as an agreement between two
or more parties that is binding in law.
This means that the agreement generates rights and
obligations which may be enforced in the Courts.
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Presentation by Hilda O'Keeffe, 31 May 2011
Essential Elements of a Contract
Essential Elements of a Contract
1.
2.
3.
4.
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Offer
Acceptance
Intention to Create Legal Relations
Consideration
Presentation by Hilda O'Keeffe, 31 May 2011
Essential Elements of a Contract
OFFER
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a statement or indication that the individual is prepared
to enter into a contract with another on specified terms;
must be capable of acceptance;
must be clear that the parties are prepared to be bound if offer
accepted;
must be communicated to another party
“I will cut your lawn for €10” – Does this constitute an offer?
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must be distinguished from an “Invitation to Treat” which expresses
an intent to accept an offer which he is free to accept or reject e.g.
Auction, advertisement, shop window displays
Presentation by Hilda O'Keeffe, 31 May 2011
Essential Elements of a Contract
ACCEPTANCE
 Acceptance occurs when the person receiving the offer
indicates/communicates acceptance
 Acceptance may be defined as an unconditional assent,
communicated by the offeree to the offeror, to all terms of the offer,
made with the intention of accepting.
In response to offer to cut the lawn
“That sounds like a good deal “ – acceptance?
“We have a deal” – acceptance?
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If the offeree queries or bargains with the terms of the original offer it
is considered that the offeree has passed the initiative back to the
original offeror by making a counteroffer e.g. terms and conditions
Presentation by Hilda O'Keeffe, 31 May 2011
Essential Elements of a Contract
INTENTION TO CREATE LEGAL RELATIONS
The Parties must have an intention to create
legal relations between themselves.
In commercial agreements there is a strong presumption that the parties
intend to be legally bound.
This presumption can generally only be rebutted by express words.
Letters of intent, heads of agreement and memoranda of understanding
Any document intended to operate as a non binding document should
contain an express term that there is no intention to create legal
relations.
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Presentation by Hilda O'Keeffe, 31 May 2011
Essential Elements of a Contract
CONSIDERATION
There must be some form of consideration for the contract
Adequacy –
left to the parties to determine whether consideration is
adequate - provided there is some consideration, the
courts will not investigate its adequacy
Sufficiency –
law requires sufficiency e.g. promise to perform existing
contractual obligation is not sufficient. If the
consideration is empty or illusory then the court may
not regard it as sufficient
White – v- Bore
Promise by son not to bore father with complaints - not sufficient
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Presentation by Hilda O'Keeffe, 31 May 2011
Formation and Interpretation
There must be agreement on the fundamental elements of
a contract. Whether the parties have reached an
agreement is determined by an objective standard. What
each party believes the other to be agreeing to will not be
the determining factor.
Rather, would an objective bystander,
acting reasonably, looking at all of the relevant
facts conclude that the parties had come to an
agreement on the essential terms of the contract
with the intent to form a legally binding
relationship.
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Presentation by Hilda O'Keeffe, 31 May 2011
ORAL OR VERBAL CONTRACTS
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Irish Contract Law is relatively informal. Contracts can be held to
exist without any paperwork. Even very large deals can be
completed verbally or with minimum paperwork

Contract for construction of “Queen Elizabeth”
contained in letter from builder to the effect :
“ We agree to build the Queen Elizabeth for 5 million pounds”
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A Verbal Contract can be put in place in many circumstances where
the essential elements of a contract are agreed or to an objective
observer they would be considered to have been agreed .
Ryanair Case 2010 – “fairly brought to the attention of the other party”
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Presentation by Hilda O'Keeffe, 31 May 2011
Contracts in Writing
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Certain Contracts must be evidenced in writing under the Statute of
Frauds 1695 which include:
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Contracts for the sale of land
Contracts for marriage
Contracts of Guarantee
Contracts not to be performed within a year
Must be evidenced by a memorandum in writing containing particulars in relation to:
1. Parties to the Contract
2. Price
3. Property
Known as the “three P’s”.
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Presentation by Hilda O'Keeffe, 31 May 2011
WHY HAVE A CONTRACT IN WRITING?
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Precludes argument from the other side that they didn’t know or
didn’t read the terms.
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Terms are clearly set out which reduces the risk of dispute.
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If certain terms are omitted or not in writing courts
will take a commercial common sense perspective
in the case of dispute. If in writing, the courts will
rarely look behind the written contract.
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Presentation by Hilda O'Keeffe, 31 May 2011
CAPACITY TO NEGOTIATE AND
CONTRACT?
Presentation by Hilda O'Keeffe, 31 May 2011
Capacity to Contract
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Contracting party must be free to enter into the contract and have authority to
enter into the contract.
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All persons of full age (over 18) & sound mind - capacity to contract
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Companies - refer to OCLA and we will check the “objects” clause in the
Memorandum of Association of the Company to ensure they have capacity to
enter into a particular contract.

Companies outside Ireland – OCLA will need to carry out additional checks
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If a party does not have capacity to contract , there is a risk that the contract
will be held unenforceable and could result in exposure to the University
Presentation by Hilda O'Keeffe, 31 May 2011
Capacity within the University
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
Capacity to contract within the University is delegated by Governing
Body
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University College Cork – National University of Ireland, Cork is the
correct legal tile (under Statutory Instrument 446/1998) and is the
contracting party for all contracts/agreements binding the University
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For details refer to the University Signing Authority and Approval
Policy http://ocla.ucc.ie/LegalAffairs/SigningAuthorityFeb2011.pdf

Review the policy to determine relevant approvers and the relevant
signing authority who has the capacity to enter into a binding
agreement on behalf the University
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Read in conjunction with other University Policies
Presentation by Hilda O'Keeffe, 31 May 2011
REVIEW OF CONTRACT
ALL AGREEMENTS BINDING THE UNIVERSITY
(OTHER THAN STANDARD PRE APPROVED AGREEMENTS)
TO BE APPROVED BY
THE OFFICE OF CORPORATE AND LEGAL
AFFAIRS
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Presentation by Hilda O'Keeffe, 31 May 2011
Review of Contracts
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All research contracts to be sent to the Research Office
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All financial terms to be approved by the Finance Office
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All intellectual property matters to be approved by Research
Office/TTO
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All academic agreements to be approved by the Registrar’s Office
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All approvals to be obtained in accordance with the signing authority
policy
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Presentation by Hilda O'Keeffe, 31 May 2011
Negotiating – Subject to Contract
Presentation by Hilda O'Keeffe, 31 May 2011
Negotiating Contracts
1.
Understand your requirements and objectives and
what you can deliver within the cost/time/resource
constraints
2.
Identify risks for the University and stakeholders
within the University
3.
Brief and involve stakeholders and your internal
advisors at an early stage (legal, financial,
technical, head of unit, relevant VP)
4.
Anticipate the other parties strategy and objectives
5.
Avoid communicating information which reduces
your negotiating power
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Presentation by Hilda O'Keeffe, 31 May 2011
Subject to Contract
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Non binding negotiations
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SUBJECT TO CONTRACT
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As a matter of good practice – when negotiating contracts all
discussions should be stated to be “Subject to contract” and all
correspondence should be headed “Subject to contract/contract
denied”
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This term has the effect that neither party will be contractually bound
until agreements have been signed and exchanged.

Originally used in property negotiations, now widely used in all
negotiations.
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Presentation by Hilda O'Keeffe, 31 May 2011
Memorandum of Understanding/Agreement
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Misunderstanding within the University that Memorandum of Understanding/
Agreement are non binding

Remember: Any agreement which complies with the essential elements of a
contract may be considered binding between the parties.

Best practice is to take advice from OCLA as to the binding nature of the
agreement
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If intended that the agreement will be non binding include a clause which
states that it is not the intention to create legal relations between the parties
or a legally binding agreement.

This will not guarantee the memorandum is not binding but should serve to
defeat any claim that there is an intention to create legal relations
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Presentation by Hilda O'Keeffe, 31 May 2011
Undertakings, Indemnities and Warranties
Presentation by Hilda O'Keeffe, 31 May 2011
Undertakings and Warranties
Undertaking
Express promise to do something in the future
Warranty
Statement as to a particular state of affairs. Expressed in the present tense.
Warranties and Undertakings are terms which allow one party to sue the other
Party. If breached, the injured party is entitled to claim damages for breach of
Contract.
Under Irish contract law, the amount and type of damages are limited to those
that flow directly from the breach or were in the reasonable contemplation of
the parties at the time they entered into the contract.
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Presentation by Hilda O'Keeffe, 31 May 2011
Indemnities
Indemnities
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An indemnity is a promise from one party to pay another in the event
that party suffers a loss in respect of a particular event.
Indemnities can transfer entire risk from one Party
Advantage of an indemnity over a breach of contract claim is an indemnity
can be regarded as a debt claim and not subject to the same remoteness of
damage and mitigation of loss.
Indemnity only appropriate in circumstances where you have agreed to
allocate full risk from one party to another or there would be indirect and
consequential losses which would not be recoverable if relying on
undertaking or warranty.
Presentation by Hilda O'Keeffe, 31 May 2011
Negotiating Indemnities and Warranties
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Do not agree to an indemnity, warranty or undertaking in any circumstances
where you have not taken legal advice
Always resist an indemnity for breach of contract - unnecessary – have
action in damages and only serves to increase the scope of loss recoverable.
Advise that all indemnities need to be approved by University and University
may require a limitation/cap or exclusion on our liability
Do not accept a clause which states we will “hold a party harmless”
Generally university seeks to exclude liability for indirect and consequential
loss however liability may have been assumed under a related agreement seek legal advice
University would normally not give warranties or indemnities in relation to
breach of confidence, or infringement of third party rights – seek legal advice
It is common practice not to exclude liability for personal injury, death or fraud.
(based on unfair contract terms legislation in UK)
Generally indemnifying party should have control of claims to which the
indemnity relates
Presentation by Hilda O'Keeffe, 31 May 2011
Insurance
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University will always require evidence of insurance (as appropriate)
e.g. Employers liability, public liability, professional indemnity,
product liability
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Evidence of insurance does not alter liability at law but ensures that
parties have the resources to meet the claims that fall under the
scope of their insurance
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Remember the limitations on insurance cover
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Note: Many policies do not cover liability
assumed under a contract and will be subject
to various exclusions, conditions and excesses.
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Presentation by Hilda O'Keeffe, 31 May 2011
General and Boilerplate Clauses
Presentation by Hilda O'Keeffe, 31 May 2011
General and Boilerplate Clauses
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Dispute Resolution Clause - Mediation and Arbitration
Confidentiality – where necessary and appropriate
Termination Clause
Survival of Obligations Clause
Severability Clause
No partnership or agency
No assignment
Entire Agreement Clause
Governing Law
Jurisdiction Clause – where enforceable and where
litigation should proceed
Amendments
Presentation by Hilda O'Keeffe, 31 May 2011
Tips and Traps
Presentation by Hilda O'Keeffe, 31 May 2011
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Consider what you want to achieve. What ? Why? When?
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Communicate the purpose and objective and any risk areas to the OCLA
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Identify any conflicts of interest and disclose at an early stage
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Involve your internal advisors at an early stage. Do not wait until the
fundamental terms have been agreed – it may be too late to renegotiate
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Ensure all agreed terms are detailed in writing in the final contract.

Read the final contract/agreement. Make sure you understand the terms.
Where the terms are rewritten by other side ensure they reflect what has
been agreed. If you don’t understand the terms it is likely a judge may view
in the same way. Seek advice if you are not clear.
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Presentation by Hilda O'Keeffe, 31 May 2011
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
Always take care in using legal terms in negotiations as there is
often a legal meaning which is not intended by the negotiating
parties e.g. Use of the word “Shall “ and “may”
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Use of the word “partnership” or “joint venture” – these words have
particular legal meaning which could potentially have serious
implications for the University – joint and several liability. In the
alternative, use the word “Collaboration”
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Insert legal title for the University (S.I. 446/1998) as
“ University College Cork – National University of Ireland, Cork”
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Remember: UCC as a public body is expected to conduct business
in a proper manner
Presentation by Hilda O'Keeffe, 31 May 2011
Conclusion
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Remember the essential elements of a contract
Always conduct negotiations subject to contract
Identify the approver and party with the
capacity to bind the University under the
signing authority policy
Identify the stakeholders and approvers
Seek advice at an early stage
Consider Procurement requirements
Be extremely careful in relation to Undertakings
Warranties and Indemnities
Ensure all agreements binding the University
are forwarded for review by the Office of
Corporate and Legal Affairs with background
details, identified risks and copies of relevant
documentation with sufficient time to allow
adequate review.
Presentation by Hilda O'Keeffe, 31 May 2011
THANK YOU - QUESTIONS?
Presentation by Hilda O'Keeffe, 31 May 2011
This presentation is for general purposes only and does
not constitute legal advice.
For further information or if you require Legal Advice in
relation to a contract , please contact:
Hilda O'Keeffe
Solicitor
Office of Corporate & Legal Affairs
UCC
Tel: 021 4901880
Email: [email protected]
Web: http://ocla.ucc.ie
Presentation by Hilda O'Keeffe, 31 May 2011