sponsored by: the office of the general counsel

Sponsored by:The Office of the General Counsel

Contract Seminar

Presented By:

◦Peter Michelson, Esq.

◦Dawna McIntyre, Esq.

◦Nathan LaVallee, Esq.

All characters, contracts and events appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental.

No animals were harmed in the making of this presentation.

Disclaimer

Contracts Part I

What is a contract?

Any agreement where two (or

sometimes more than two)

parties make mutual promises

to each other.

E.g. Microsoft promises to sell

software; University

promises to pay for software.

The name of document does not matter: Contract, Agreement, Settlement Agreement,

Affiliation Agreement, Memorandum of Understanding. If there are mutual binding promises, it’s a contract.o We in the General Counsel’s Office often hear: “It’s an

MOU, it’s not a contract.”• It IS a contract.

o A contract is binding promises. Though many contracts involve money, not all contracts do.

Does the name of the contract matter?

Clarity, clarity, clarity. If you write language that you don’t understand, a judge won’t understand it either.

Whenever possible, use a form prepared by the University.

Ambiguity can be a big problem. If one section of a contract says one thing, and another says another thing, that is a recipe for a lawsuit.

How to write a contract?

You need to be able to say what the Contractor is supposed to do, how and/or how well it is supposed to do it, and when it is supposed to get it done.

Put another way, you have to be able to define what a breach of contract is.

Write a good scope of services section.

UMass hired a company it had used before to perform services, and University had been satisfied with services rendered first time. Several years later, University issued request for bids to do another services project, and it went with same company. Scope of service was not very specific.

In the intervening period, the company with which we contracted had been acquired by another company. Service rendered by “new” company was terrible. However, there was little in the contract to point to in order to establish a breach of contract by the company hired to do the services.

X company v. UMass

Dates of service?Payment terms?

Delivery dates?• You would be shocked how often those terms are

inaccurate or vague.

Are parties properly identified?E.g. Use “University of Massachusetts” or “University of Massachusetts Amherst”; do not use “UMass Facilities Department” or “Department of Athletics.”

Are all the details correct?

A standard clause in every contract should be that the parties reserve the right to amend this contract. People sometimes want to change terms, correct mistakes, fix things they did not foresee, or make other changes. This clause should be non-controversial.

Allow for amendments.

Indemnity clauses.◦ Under the Massachusetts Constitution, the

University (or any agency of the state) may not indemnify other parties. If a party is insistent, e.g. “we have to be indemnified!!”, usually that can be dealt with through insurance coverage that names the party that is seeking indemnification as an insured. If we are paying someone for services, the usual practice is to insist that the contracting party indemnify the University.

Avoid whenever possible, certain clauses.

“Both parties agree to indemnify the other.” Aside from the issues just discussed, what does this mean?

Mutual indemnification clauses.

This is a provision that matters to lawyers, but probably does not matter so much to you, because it seems pretty arcane. ◦ The OGC has a strong preference that the Law of

the Commonwealth of Massachusetts apply. Why? What do you know about Florida, or Michigan, or Nebraska law? That’s about as much as we in the General Counsel’s Office know about Florida, or Michigan, or Nebraska law. If we end up litigating and laws of another state apply, the University is likely to need to retain outside counsel to assist with the litigation.

Choice of Law.

Some vendors or parties with whom we contract like to avoid court and seek to insert an arbitration clause, on the thinking that arbitration of disputes costs less than going to court. The Office of General Counsel’s feelings about this are mixed. We do not view the inclusion of an arbitration clause a “deal-breaker,” but we do not favor this either. When this issue arises, please consult the OGC.

Arbitration Clauses.

In general, renewing a contract for more than a year or two is disfavored. After a few years, it’s a good idea to take a fresh look at the contract. It may be that the University will want to renew on substantially the same terms, but it’s equally likely that the University will want to look at the contract again, and perhaps negotiate new terms, new scope of services, and/or new price.

Automatic renewal clauses.

Not that many contracts have confidentiality or non-disclosure clauses, but at any rate the University should not agree to them. The Massachusetts Public Records Law makes contracts entered into by the University presumptively public records. If the contracting party is insistent, then the University should insist on adding the words, “To the extent permitted by law….” which will protect the University in the event it has to disclose a contract.

Confidentiality clauses.

Do not ask for or agree to a request to pay another party’s legal fees.

This is a big “no-no.” If another party insists that it has to have this clause, I view this as a deal breaker.

Legal Fees.

In what circumstances can the parties get out of the contract?◦ This needs to be thought through. There is

termination of a contract on a fixed date; e.g. “Contract expires on November 20, 2013.”

There is also termination “for cause.”◦ Be sure you attempt to define what “cause” is,

because this often leads to litigation. There can also be termination upon

completion of a task or set of tasks.◦ Make sure both parties understand what

“completion” is.

Termination clauses.

Performance issues.◦ Does the contractor do what he said he’d do,

when he said he or she would do it? ◦ Equally important, does the contract define well

what the Contractor was supposed to do?◦ Most important related problem: failure to

document problems. Write an email; write a memo to the file. Don’t ignore problems.

What can go wrong?

Do the parties understand the due dates?

Do the parties agree on what work is to be done?

Performance and due dates.

A party simply fails to show up, either at all, or on a regular basis.◦What can you do? Again, document everything. Draft the contract to provide for

performance payments. By this I don’t mean, payments over the course of the contract term, but rather payments based on various performance benchmarks.

Set aside a percentage of the contract to be paid at the end of the contract.

Complete failure of performance.

Contracts Part II

What is a contract?A contract is a legally enforceable promise, which binds the parties.

A contract can be either written or oral.

A contract can come in many forms and be called by many names, including:

● Agreement, ● Purchase Order, ● MOU, (“Memorandum of Understanding”)● Letter of Understanding● Affiliation Agreement●No Name at All

UNDERSTAND WHAT YOU ARE EXECUTING!

Always READ and UNDERSTAND the terms to a contract BEFORE executing it.

The body of a contract can be described by breaking it down into specific sections:

● Introduction● Consideration● Terms and Conditions● Miscellaneous Provisions● Signature


The Introduction in the University’s Form contract for services:

• Identifies the date the contract is made, effective and executed.

• Identifies the legal names of the parties,

• Identifies the address of the parties,

This agreement is made, entered into, and effective on ______[DATE]_________________ by and between the University of Massachusetts, _________________________(Campus), (hereinafter called “University”), an agency of the Commonwealth of Massachusetts and _______[NAME OF CONTRACTOR]____,(Contractor’s legal name and address)(hereinafter called the “Contractor” and collectively the “Parties”).


The Contract is comprised of the following:

The terms and conditions stated in the contract for services

Any amendment to the contract for services

The scope of services and any attachment to the scope of services

This agreement (the “Contract”) is comprised of the following documents, listed in the order of precedence: (1) this Contract Terms and Conditions; (2) any Contract Amendments, as identified in Section 2, below; and (3) any attached Scope of Services as identified in Section 1, below, including any addenda thereto. The Contract Terms and Conditions and any agreed upon changes thereto included in any Contract Amendments shall take precedence over any additional or conflicting terms and conditions as may be included in any other document attached hereto.


The terms of the contract for services—and any amendment to the terms of the contract for services executed by the parties will CONTROL

IF any language in the scope or documents attached to the scope are in addition to or conflict with the contract terms and conditions or an amendment, they will NOT control.

What is an example of a term that is an “addition to?”

●The Contractor includes an arbitration clause.


UNDERSTANDING WHAT YOU ARE EXECUTING!

IF any language in the scope or documents attached to the scope conflict with the contract terms and conditions or an amendment, they will NOT control.

What is an example of a term that is “conflicting?”

●The contract for services provides that the contract is governed by Massachusetts law. The Contractor includes in its scope of services that Maryland Law shall govern the contract.


WHAT IS A SCOPE OF SERVICES?

What is a “Scope of Services”

A “Scope of Services” is a document which describes the tasks or services to be performed under a contract in some detail. The work is usually set out into specific tasks with deadlines or deliverable dates.

The Scope of Services must be executed by the Parties.

1. Scope of Services. The Contractor agrees to perform the following services: ___________________________or if applicable, those services described in the Attachment[s] attached hereto. Any Attachment attached hereto is made a part of this Contract and must be specifically labeled (e.g. “Attachment A, Scope of Services, consisting of ‘n’ pages”). Only the Scope of Services specifically referenced in this Contract and signed by the Parties’ authorized representatives shall apply.

WHAT IS A SCOPE OF SERVICES?

The Services that are to be provided must be spelled out clearly defining any required reports and timelines.

The Scope should include at least the following elements:

An introduction

Qualifications of the Contractor

Outline of the Services to be performed

Timelines associated with any Services Delivered

How the Contractor will be paid.

Signature of the Parties

• SCOPE OF SERVICES/WORK

• 1. Introduction/Purpose

• [Insert introductory sentence or two about purpose of contract, reason for procurement]

• 2. Qualifications of Vendor

• [Insert this paragraph if Contractor has professional qualifications; e.g., license to practice medicine; license to sale a ship or special skill; etc., that are required for the Services or Tasks to be rendered by the Contractor.]

• 3. Services To Be Provided By Contractor

• [Insert list of services in general detail or tasks to be performed by the Contractor specific to this contract.]

• 4. Deliverables & Timelines

• [This may be combined with the “Services To Be Provided.” Specify Timeline of Services, milestones, or Tasks to be rendered by Contractor]

• 5. Compensation

• [Insert brief description of payment terms. If applicable indicate whether certain payments are associated with certain Services or Tasks being rendered by Contractor. If a particular person needs to sign off on the payments indicate that person’s name.]

• [SIGNATURES OF THE PARTIES]

WHAT IS AN AMENDMENT?

If you are executing an amendment at the same time you are executing the Contract, then you would fill in this section.

Otherwise, if the Contract has already been executed, you will need to prepare an “Amendment” to the Contract to include language to this section of the Contract.

The Amendment will need to be identified as to what “letter” attachment it is and the number of pages.

Contract Amendments. The following amendments to the Contract have been executed by duly authorized representatives of the Parties and are attached hereto and incorporated herein: _______________________________________________________________________________________________. All amendments attached hereto must be specifically labeled (e.g. “Attachment B, Amendment No. 1, consisting of ‘n’ pages”).


An amendment to a contract allows the parties to make changes to the original contract.

The changes to the original contract may be to modify the terms or include additional terms, or clarify terms to the original contract.

An amendment does NOT replace the original contract. An amendment only changes the part or parts of the original contract the parties agree to change.

The original contract is still valid and binding on the parties.

The changes agreed upon by the parties now need to be incorporated into the original contract—through an amendment.

The Contractor shall provide energy rated windows for the Client. The Client agrees to pay the Contractor for any and all energy rated windows provided by Contractor.Signed: ContractorSigned: Client

After the contract has been executed, the parties agree as follows:

The Contractor shall provide purchase and install energy rated efficient windows for the Client. The Client agrees to pay the Contractor for any and all energy rated efficient windows provided installed by Contractor.Signed: ContractorSigned: Client


The Contractor shall provide energy rated windows for the Client. The Client agrees to pay the Contractor for any and all energy rated windows provided by Contractor.Signed: ContractorSigned: Client

After the contract has been executed, the parties agree as follows:

The Contractor shall provide purchase and install energy rated efficient windows for the Client. The Client agrees to pay the Contractor for any and all energy rated efficient windows provided installed by Contractor.Signed: ContractorSigned: Client

1. The word “provide” in the first sentence of the Contract shall be deleted and the words “purchase and install” shall be inserted therein.

2. The word “rated” in the first sentence of the Contract shall be deleted and the word “efficient” shall be inserted therein.

3. The word “rated” shall be deleted in the second sentence of the Contract and the word “efficient” shall be inserted therein.

4. The word “provided” shall be deleted in the second sentence of the Contract and the word “installed” shall be inserted therein.

The original contract now consists of the contract that was first executed by the parties and this amendment. Together, these documents create the original contract.

WHEN DOES THE CONTRACT START AND END!

The “Start Date” is the date services are being rendered. The “Completion Date” is the date the services end.

The “Start Date” cannot be dated BEFORE, the effective date of the contract provided in the introductory paragraph.

Why? Because you cannot start services BEFORE you enter into the Contract.

3. Dates of Performance: From: ___________________ (Start Date)

To: ____________________ (Completion Date)

EXAMPLE:

This agreement is made, entered into, and effective on July 1, 2013 by and between. . . .~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Dates of Performance:

From: March 1, 2013

To: December 31, 2013


Clarifying Payment terms is essential. Is the Contractor being paid hourly?, Weekly?, Semester?

Is the Payment upon the submittal of an approved invoice?

Are Travel expenses included?Other Expenses?

What is the Total “Not To Exceed” Amount of this Contract?

Payment:

A. The University shall compensate the Contractor for the services rendered at the rate of $___________________ per _____________________(e.g., hour, week, semester, project, etc.).

B. In no event shall the Contractor be reimbursed for time other than that actually spent providing the described service(s).

C. Payment will be made upon submittal and approval of the Contractor’s Invoice(s) that is (are) received Monthly ____, Quarterly ____ , Other ____ (specify)_________________________________________________________.

D. Reimbursement for Travel and Other Contractor Expenses:

____All travel and meals are part of this Contract. No reimbursement will be made.

____Contractor will be reimbursed for pre approved travel in an amount not to exceed $ _____________________. Copies of receipts must be submitted. Any expense claimed by the Contractor for which there is no supporting documentation shall be disallowed.

____Contractor will be reimbursed for OTHER expenses in an amount not to exceed $_______________________.OTHER Expenses shall be limited to: _________________________________________________________.

Copies of receipts must be submitted. Any expense claimed by the Contractor for which there is no supporting documentation shall be disallowed.

E. The total of all payments made against this Contract shall not exceed $____________________________________.

TERMINATING THE CONTRACT!

Termination “Without Cause” allows the University to terminate the Contract without any liability. The Contractor does not have the right to sue the University for damages because the University ended the Contract before its term. In order to benefit from this clause, the University must give the Contractor notice of termination thirty days before the termination event.

Termination “With Cause.” If the Contractor breaches a “material” term or condition, the University can end the Contract—with notice. What is “material.”

A “material” term in a contract is a term or provision which concerns significant issues, such as price, quantity, the type of work to be done, and terms of payment or performance.

A breach of a material term would not only include the material terms in the Contract; but, also include the Contractor not performing services outlined in the Scope of Service that are essential to the performance of the Contract.

Termination:

A. Without Cause. This Contract may be terminated without cause by either party by giving written notice to the other at least thirty (30) calendar days prior to the effective date of termination stated in the notice.

B. With Cause. If Contractor breaches any material term or condition stated herein or fails to perform or fulfill any material obligation required by this Contract, the University may terminate this Contract by giving written notice to the Contractor stating the circumstances of the breach at least seven (7) calendar days before the effective date of termination stated in the notice. Notwithstanding the foregoing, the notice of termination provided by the University may state a period during which the alleged breach may be cured by the Contractor, which cure shall be subject to approval by the University. In the event of a breach by Contractor, Contractor may be subject to any and all applicable contract rights and remedies available to the University. Applicable statutory or regulatory penalties may also be imposed.

WHAT HAPPENS UPON TERMINATION?

If the Contract is terminated for any reason, all data and finished products become the property of the University. If they were prepared by the Contractor under this Contract.

If the Contract is terminated Without Cause, the University is responsible for paying the Contractor for all services the Contractor rendered subject to any offsets of moneys due the University. And only if the Contractor is NOT in Default. And only if the Contractor sends in an invoice as to the amounts due.

12. Obligations in Event of Termination:

A. Upon termination of this Contract, all finished or unfinished documents, data, studies, and reports prepared by the Contractor pursuant to this Contract, shall become the property of the University.

B. Upon termination of this Contract without cause, the University shall promptly pay the Contractor for all services performed to the effective date of termination, subject to offset of sums due the Contractor against sums owed by the Contractor to the University, and provided Contractor is not in default of this Contract and Contractor submits to the University a properly completed invoice, with supporting documentation covering such services, no later than thirty (30) calendar days after the effective date of termination.

KEEP MY INFORMATION CONFIDENTIAL!

Contractor must comply with all state and federal laws regarding confidentiality and privacy.

Contractor must comply with G.L. ch.66A, and G.L. ch.93H

Contractor must implement safeguards to restrict access to confidential information.

Contractor must ensure security of confidential information

Contractor must inform its employees and agents as to the requirements of this section.

16. Confidentiality/Privacy. The Contractor shall comply with all applicable state and federal laws and regulations relating to confidentiality and privacy. In addition, in the performance of this Contract, the Contractor may acquire or have access to “personal data” and become a “holder” of such personal data (as defined in Mass.Gen.Laws ch. 66A) or personal information (as defined in Mass.Gen.Laws ch. 93H). Personal data and personal information shall be deemed to be “Personal Information.” Contractor shall implement feasible safeguards to restrict access and ensure the security, confidentiality and integrity of all Personal Information owned, controlled, stored, or maintained by University and provided to or accessed by Contractor in the performance of services irrespective of the medium in which it is held. The Contractor agrees that it shall inform each of its employees, servants or agents, having involvement with Personal Information of the laws and regulations relating to confidentiality and privacy.

KEEP MY INFORMATION CONFIDENTIAL!

16. Confidentiality/Privacy. The Contractor shall comply with all applicable state and federal laws and regulations relating to confidentiality and privacy. In addition, in the performance of this Contract, the Contractor may acquire or have access to “personal data” and become a “holder” of such personal data (as defined in Mass.Gen.Laws ch. 66A) or personal information (as defined in Mass.Gen.Laws ch. 93H). Personal data and personal information shall be deemed to be “Personal Information.” Contractor shall implement feasible safeguards to restrict access and ensure the security, confidentiality and integrity of all Personal Information owned, controlled, stored, or maintained by University and provided to or accessed by Contractor in the performance of services irrespective of the medium in which it is held. The Contractor agrees that it shall inform each of its employees, servants or agents, having involvement with Personal Information of the laws and regulations relating to confidentiality and privacy.

REMEMBER -- THE UNIVERISTY IS SUBJECT TO THE MASSACHUSETTS PUBLIC RECORDS LAW, WHICH PROVIDES:

Every record that is made or received by a government entity or employee is presumed to be a public record unless a specific statutory exemption permits or requires it to be withheld in whole or in part. In addition, the University is not required to notify anyone of the disclosure, except the individual making the public records request.

What does this mean?

The University will DISCLOSE ALL information not exempt by the Public Records law

The University will NOT give the Contractor prior notice of the disclosure

The University will NOT be liable for disclosing information in accordance with the Public Records law.

The University will NOT maintain the confidentiality of any information subject to the Public Records Law.

THIRD PARTY STAY AWAY UNLESS YOU HAVE PERMISSION!

The Contractor CANNOT give its obligations under the Contract to a Third Party WITHOUT prior written consent from the University.

Example:

Sam contracts with Susan Company to deliver bottled water to his home.Susan Company contracts with another company to deliver bottled water to Sam’s home. Susan Company must have consent from Sam FIRST.

17. Assignment and Delegation. The Contractor shall not assign or in any way transfer any interest in this Contract without the prior written consent of the University, nor shall the Contractor subcontract any service without the prior written approval of the University. Any purported assignment of rights or delegation of performance in violation of this Section is VOID.

WHO DECIDES, WHERE IS IT DECIDED?

Contractor must agree to Massachusetts laws.

Contractor must bring any suit arising from this Contract in Massachusetts.

WHY?The University is familiar with Massachusetts law. Agreeing to another state’s law means you need to understand how that law interprets the language in this Contract. How that law interprets the rights of the parties in a dispute. How that law determines damages.

You will need to hire an attorney in that state to review that state’s laws as it relates to the provisions of this Contract. This may entail changing some of the language in the Contract to better protect the University.

If the dispute arising out of this Contract is held in another state. You will be responsible for hiring outside counsel. Providing traveling accommodations for witnesses as well as expert witnesses.

20. Choice of Law. This Contract is entered into in the Commonwealth of Massachusetts, and the laws of the Commonwealth, without giving effect to its conflicts of law principles, govern all matters arising out of or relating to this Contract and all of the transactions it contemplates, including, without limitation, its validity, interpretation, construction, performance and enforcement.

21. Forum Selection. The Parties agree to bring any action arising out of or relating to this Contract or the relationship between the Parties in the state courts of the Commonwealth of Massachusetts which shall have exclusive jurisdiction thereof. The Contractor expressly consents to the jurisdiction of the state courts of the Commonwealth of Massachusetts in any action brought by the Commonwealth or the University arising out of or relating to this Contract or the relationship between the Parties, waiving any claim or defense that such forum is not convenient or proper. This paragraph shall not be construed to limit any other legal rights of the Parties.

PROTECT ME!The indemnification language protects the University.

The Contractor Must “DEFEND:” The Contractor MUST hire an attorney to protect the contractual rights of the University

The Contractor MUST “INDEMNIFY:” The Contractor MUST compensate the University for its loss.

The Contractor MUST HOLD the University “HARMLESS:” The Contractor will not hold the University responsible for any loss, damage, or legal liability.

.

23. Indemnification of University. The Contractor shall defend, indemnify, and hold harmless the Commonwealth, the University, its Trustees, Officers, servants, and employees from and against any and all claims, liability, losses, third party claims, damages, costs, or expenses (including attorneys’ and experts’ fees) arising out of or resulting from the performance of the services performed by the Contractor, its agents, servants, employees, or subcontractors under this Contract, provided that any such claims, liability, losses, third party claims, damages, costs, or expenses are attributable to bodily injury, personal injury, pecuniary injury, damage to real or tangible personal property, resulting therefrom and caused in whole or in part by any intentional or negligent acts or omissions of the Contractor, its employees, servants, agents, or subcontractors. The foregoing express obligation of indemnification shall not be construed to negate or abridge any other obligation of indemnification running to the Commonwealth and/or the University that would otherwise exist. The University shall give the Contractor prompt and timely notice of any claims, threatened or made, or any law suit instituted against it which could result in a claim for indemnification hereunder. The extent of this Contract of indemnification shall not be limited by any obligation or any term or condition of any insurance policy. The obligations set forth above shall survive the expiration or termination of this Contract.

PROTECT ME!From what?Any and all claims, liability, losses, third party claims, damages, costs, or expenses, including expert and attorneys’ fees

WHEN? When these claims are related to the performance of services under this Contract.

IF the claims relate to”

Bodily injuryPersonal injuryPecuniary injuryDamages to real or tangible personal property

AND the claims are

Caused by the intentional or negligent act acts of the Contractor.

Contractor pays even if damages go beyond the insurance limits of the Contractor.

23. Indemnification of University. The Contractor shall defend, indemnify, and hold harmless the Commonwealth, the University, its Trustees, Officers, servants, and employees from and against any and all claims, liability, losses, third party claims, damages, costs, or expenses (including attorneys’ and experts’ fees) arising out of or resulting from the performance of the services performed by the Contractor, its agents, servants, employees, or subcontractors under this Contract, provided that any such claims, liability, losses, third party claims, damages, costs, or expenses are attributable to bodily injury, personal injury, pecuniary injury, damage to real or tangible personal property, resulting therefrom and caused in whole or in part by any intentional or negligent acts or omissions of the Contractor, its employees, servants, agents, or subcontractors. The foregoing express obligation of indemnification shall not be construed to negate or abridge any other obligation of indemnification running to the Commonwealth and/or the University that would otherwise exist. The University shall give the Contractor prompt and timely notice of any claims, threatened or made, or any law suit instituted against it which could result in a claim for indemnification hereunder. The extent of this Contract of indemnification shall not be limited by any obligation or any term or condition of any insurance policy. The obligations set forth above shall survive the expiration or termination of this Contract.

SPEAKING OF INSURANCE….

Contractor should provide insurance to the University. Naming the University as an additional insured .

WHY?A Contractor may agree to the Indemnification language; but, where is the money coming from? By requiring Insurance—you know where the money is coming from to protect the University.

PROVIDE AN AMENDMENT TO THE CONTRACT INSERTING THE FOLLOWING AS A SEPARATE PARAGRAPH IN SECTION 23.

See: Sample Amendment and Exhibit

a. required ______ not required ______ Commercial General Liability Insurance including products and completed operations liability, and contractual liability coverage specifically covering the Contract, written on an occurrence form, with combined limits for bodily injury, personal injury, and property damage of at least two million dollars ($2,000,000) per occurrence and four million dollars ($4,000,000) per aggregate.

b. required ______ not required ______ Workers’ Compensation Insurance in compliance with applicable federal and state laws, including Employers Liability Insurance with limits of at least one million dollars ($1,000,000) per occurrence.

c. required ______ not required ______ Automobile Liability Insurance covering owned, non-owned, and hired vehicles with combined limits for bodily injury and property damage of at least one million dollars ($1,000,000) per accident.

d. required ______ not required ______ Professional Liability Insurance on a claims made basis, covering claims made during the policy period and reported within four (4) years of the date of occurrence. Limits of liability must not be less than $1,000,000.

CAN I AMEND THIS CONTRACT?

YES, you can.

This section allows the Parties to “Amend” the Contract when:

The Amendment is executed by the Parties.

Executed by “authorized” representatives of the Parties.

In writing

Upon mutual agreement.

27. Amendments. This Contract may be amended only by written agreement of the Parties, executed by the Parties’ authorized representatives and in compliance with all other regulations and requirements of law.

ATTACHMENT ____________

Amendment No. ___________

This amendment (“Amendment No. ____”) made this _____ day of ____________, 20__ by and between the University of Massachusetts _____________ (the “University”) and ___________________________ (the “Contractor”) collectively (the “Parties”) amends the contract for services made and entered into by the Parties on ___________ (the “Contract”).

[Determine which “Whereas” clause is appropriate]

Whereas, the Parties wish to extend the term of the Contract;

Whereas, the Parties wish to increase the Contract amount by $ _______ to $ _______;

Whereas, the Parties wish to amend the Scope of Services to the Contract;

Whereas, the Parties wish to amend the Contract to include additional terms and conditions; and

Whereas, Section 27 of the Contract entitled “Amendments,” allows for the Parties upon mutual agreement to amend the Contract by executing a written amendment.

Now Therefore, in consideration of the mutual provisions and covenants contained herein and in the Contract, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

[Used if not already inserted in Section 3 of the Contract]

1. The following shall be inserted in section 2 of the Contract entitled “Contract Amendments.”

“Attachment ____, Amendment No. ___, consisting of ___ page(s)”

[Insert your changes]

The Parties here to acknowledge and agree that, except as specifically amended by the terms of this Amendment No. ___, all of the terms, covenants and provision of the Contract are hereby ratified and confirmed and shall remain in full force and effect throughout the balance of the term of the Contract. From and after the date hereof, all references in the Contract to "the Contract" or “this contract” shall mean and be the Contract as affected by this Amendment No. ___.

IN WITNESS WHEREOF, the Parties have caused this Contract to be executed by their respective duly authorized officers as of the date first above written.

[SIGNATURES]

NOTICE? OF WHAT?The “Notice” section defines HOW notice is to be made AND WHERE/TO WHOM notice may be made.

The Notice section is mainly used to give “Notice” of a breach of Contract as provided under Section 11-“Termination”

The Notice must be in writing

Addressed to a Party listed

At the address listed

29. Notice. Unless otherwise specified, any notice hereunder shall be in writing addressed to the persons and addresses indicated below (Name, postal address, phone, email address):

To the University: ____________________________________________________

To the Contractor: ____________________________________________________

WHO IS EXECUTING?• The person executing the Contract must be “authorized” to

execute contracts on behalf of the University.

• The person executing the Contract for the Contractor, must be “authorized” to execute contracts on behalf of the Contractor.

• Both must have the authority to BIND the parties to the terms and conditions of the Contract.

Contracts Part III

Contract Review Best Practices

Can I Use a Vendor’s Contract?

• Yes…• But at what cost?• Additional Review• Editing • Time Consuming

What Should I Look For When Reviewing a Vendor’s Contract?

•Looking for the PURCs •Problematic Terms

•Unacceptable Terms

•Recondite Language

•Conflicting Terms

Problematic Terms

• Can Cause Confusion• Incorrect information in the preamble

• Create Potential Issues In Future •Automatic renewal language

• Lack Clarity•Language governing how the contract can be amendment•Notice provisions

Unacceptable Terms

• Language, Condition(s) or Term(s) that require the University to agree to something that:• Is prohibited law or regulation • Against University Policy • Creates an unreasonable amount of risk

• Examples:• Language requiring the University to be sued in, or subject to, another

state’s law• Arbitration clauses • Confidentially and/or nondisclosure clauses• Language requiring the University to pay the Vendor’s legal fees or other

enforcement costs• Terms requiring University to indemnify the Vendor or any other party;• Limitations of liability• Use of the University Name and/or Logo

Recondite Language

• Contracts or portions thereof that contain language requiring specialized knowledge; or

• difficult to follow• Examples:• Trademarks • Licensing or subscription agreements • Insurance requirements

Conflicting Terms

• Conflict: incompatibility or interference, as of one idea, desire, event, or activity with another

• Example:• The University requires that its contract be governed by

Massachusetts law• The Vendor’s Contract includes a term requiring Alaska

law to govern• These terms are incompatible with each other and are

therefore…. • Conflicting Terms!!!

Conflicting Terms

• Where to look for Conflicting Terms:• Vendor’s Conflicting Terms and Other Unfavorable

Conditions• Terms & Conditions• Vendors Payments Terms• Subscription • Sample Invoice• Scope of Service • Miscellaneous*

Review • Contract • All exhibits, appendices, addendums, attachments • Any other o documents referred to by, or

incorporated into the Contract, including:• response to RPF & RFB • statements of work or services• policies and procedures• insurance requirements• property or equipment descriptions

When Using the University’s CFS• Strike all Vendor provisions that relate to a

provision in the CFS, regardless of whether the Vendor’s provision conflicts with a CFS terms.

• CFS terms should always control • No reason for duplicate terms • Examples:• Acts of God• Notice • Entire Agreement

PROPOSED SOLUTIONS

Other States Laws/Jurisdiction • Request the Vendor remove the state's name and insert

Massachusetts as the governing law and jurisdiction

• Request that the choice of law and/or Jurisdiction section remain silent: that is, agree not to have a choice of law section and have the Vendor remove the clause entirely*

• If the Vendor insists on its state law or jurisdiction controlling, you must have the Vendor include the following language at the end of the clause: "Notwithstanding anything herein, nothing in this [Contract, Agreement, etc.] shall operate to waive the sovereign immunity of the Commonwealth of Massachusetts*

• Never agree to the jurisdiction or the laws of another state if the Contract contains language requiring the University to indemnify another party;

Confidentiality/Non-Disclosure Clauses.

• Pursuant to the Massachusetts Public Records Law (M.G.L. Ch. 66 §10), the public has the right to review, inspect and copy University records unless a specific exemption allow the withholding of a record

• The existence of a service or goods contract itself can never be confidential

• Unless absolutely required, request that any Confidentiality and/or Non-Disclosure clause(s) be deleted

• If the Vendor will not accept the deletion of such a Clause, request that the following language be inserted at the beginning of the clause: “To the extent permissible under Massachusetts Law…”

• Eliminate provisions requiring the University provide notice prior to disclosure

• Contact the OGC regarding contracts that involve proprietary interests and/or trade secrets

• Legal Fees and Cost of Enforcement

• Request Vendor remove any language which suggest that a party is entitled to cost, expenses or fees incurred in the enforcement of the contract

• Request Vendor remove any language which suggests that the prevailing party shall be entitled to recover court costs and/or attorney fees

• Amendments.

• Always confirm that the Contract contains a provision requiring that amendments be in writing and signed by both parties.

• If not, request that the Vendor include the below language as a separate numbered paragraph :

• Amendments. No amendment to this Agreement shall be effective unless in writing and signed by authorized representatives of both parties and complies with all other regulations and requirements of law.

Automatic Renewals

• Request Vendor to remove the automatic renewal language and replace it with a mechanism that allows the University to renew the contract at its option e.g., • “The University may, by providing written notice no later

than 30 days before expiration of the initial term, renew this [Contract, Agreement, etc.] for an addition term of [insert time period].”;

• If the Vendor will not accept the above said language, request the Vendor remove words such “is/shall/will automatically” and insert “may be.”

Indemnification Language• As a public entity the University is prohibited from

indemnify Vendor or other parties to the Contract.• Vendors requesting additional information:• “The University, as an entity of the Commonwealth, is prohibited

from pledging the credit of the Commonwealth without the approval of a two-thirds vote of the Massachusetts Legislature. See Article 62 of the Massachusetts Constitution, as amended. The Massachusetts courts have construed statutory authorizations for public entities to enter into contracts as not authorizing indemnity clauses. Lovering v. Beaudette, 30 Mass.App.Ct. 665, 669 (1991); Raisman v. Cunningham, Inc., Civil Action

No. 93-5070-G (Super. Ct. 1995).”

• Issues with using the term “to the extent permitted by Massachusetts law… ”

• Providing notice of prohibition (cover letter)• If the Vendor refuses to remove the language

contact the OGC

Limitation of Liability

• In some instances we might want to agree to limit the Vendor’s liability to some specified amount.

• If so, we should exempt any indemnification of the University from the limitation.

• This language should be revised by requesting the Vendor to insert the following language at the end of the Limitation section:

“Notwithstanding the foregoing, the limitations of liability under this section shall not apply to a willful breach of this

agreement or to any indemnification provided by the Vendor to the University under Section _____ of the [Contract, Agreement, etc.].”

Arbitration Clauses

•It is recommended that non-binding arbitration clauses be deleted.

•Binding arbitration clauses are acceptable so long as:

• (1) the language does not require the arbitration to be conducted outside of Massachusetts or in accordance with another state or country’s laws and

• (2) the arbitration clause also includes language requiring the parties to

participate in mediation prior to requesting arbitration.

Arbitration Clauses• The proper procedure for correcting arbitration

clauses containing unacceptable requirements is to:

• request the Vendor remove any language requiring arbitration be conducted outside of Massachusetts

• request the Vendor to remove any language requiring arbitration be conducted in accordance with another state or country’s laws

Arbitration Clauses• The proper procedure for correcting arbitration clauses

that do not include mediation language is to request the Vendor add the following language:

• Mandatory Mediation. In the event a dispute shall arise between the parties to this [Contract, Agreement, etc.], the parties will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation before resorting to arbitration. The mediation will involve no formal court procedures or rules of evidence and the mediator shall not have the power to render a binding decision or force an agreement on the parties. The mediation of any claim or dispute must be conducted by a mediator who has had both training and experience as a mediator of commercial matters. Within 30 days after the selection of the mediator, the parties will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either party may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding. The parties agree to share equally in the costs of the mediation.

Who Needs to Sign?

Executing a Contract

Signing a Contract • Signing a Contract on behalf of the University is an

important responsibility and should only be done by someone who understands of the obligation being undertaken and has proper authority.

• Only certain individuals are authorized to contractually bind a University Campus.

• A person who signs a Contract on behalf of the University without authority may be subject to disciplinary action or in some cases could be personally liable for the obligations, debts and risks under that Contract.

• The University will not be bound by the terms of a Contract signed by an individual without authority unless an Officer of the University subsequently agrees that the University will honor the Contract.

Signature Authority • Ultimate signature authority is held by the

University of Massachusetts Board of Trustees. • The Board has delegated most of its signature

authority the President and Chancellors. The Chancellors, in turn have re-delegated authority to principal officers at their respective campuses.

• These principal officers may further delegate signature authority.

• The person who delegates authority retains responsibility for the actions of the person to whom authority is delegated.

• While only employees with delegated signature authority may bind the University by signing a Contract

• it is a common practice to require employee(s) working on a contract to sign it as a way of:• certifying that the contract memorializes the terms of the

agreement• verifying it is ready for execution.

• These Best Practices do not apply to internal memoranda of understanding or similar agreements that govern internal relationships between University schools, business units, department or divisions.

• An employee who has a conflict of interest with respect to a Contract does not have authority to sign the Contract.

Signatures

• Promote Efficiency • Have the lowest level employee with

proper Authority sign•Consult:• Signature Delegation Chart • Letters of Delegation

Signatures• Office of General Counsel reviews Contracts but

does not sign Contracts for the University.• While the OGC is not responsible for review of the

business terms it may provide guidance on how certain terms can affect the University. • Contracts can include terms that may seem innocuous or

insignificant to administrators, but may be legally important.

• All personnel are encouraged to consult with the Office of Counsel if they have any question about the meaning of language in a Contract.

Questions?

sponsored by: the office of the general counsel

Documents