>"What is a contract?"
Although this might seem like a simple question, there is
a great deal of misunderstanding about what is and is not a
contract. People tend to be misled by the title of a document
into thinking it is not a contract when, in fact, it is. For
example, and "agreement," a "memorandum of understanding,"
a "settlement," a "lease,", etc. may all
create legally binding contracts even if the word "contract"
never appears in the document.
Any communication
may create a contract if it has three things:
-
an
offer to provide a good or service, or a promise
to do something or to refrain from doing something,
-
an
acceptance of the offer, and
-
"consideration,"
i.e., the exchange of something valuable (money, work, mutual
obligations, etc.)
>"Does
a contract have to be in writing to be enforceable?"
Contrary to popular belief, as a general rule, the answer
is "no." A verbal agreement can create a legally binding
contract. However, as a practical matter it may be hard to prove
the existence or terms of the contract in case of a dispute
unless there were witnesses to the parties' conversations.
As a matter of good practice, all contracts should be written
and all University contracts must be put in writing.
> "What is a 'University contract'?"
Contracts that obligate the University's resources or personnel
in any way are "University contracts." In general,
agreements are not University contracts if they are entered
into on behalf of a foundation (including those affiliated with
the University), a student organization, or purely private interests.
If there is any question about whether an agreement qualifies
as a University contract, please contact the University Legal
Counsel.
> "Can you give me some examples
of University contracts?"
The kinds
of contracts are extremely varied; however, some typical examples
include:
Instructional
and internship agreements
Agreements with hotels and conference centers
License agreements for plays and musicals
Agreements with independent contractors
Articulation agreements
Event contracts
Agreements for the use of University facilities
Residence Hall contracts
Nondisclosure agreements
Memorandums of understanding
Mutual Aid agreements
Personal service/consulting agreements
Construction contracts
Research Contracts
>"Does
WCU have a policy about University contracts?"
Yes. University
Policy #62 defines contracting authority within the University.
>"Who is authorized to negotiate
and sign contracts that bind WCU or its units?"
The contracting policy states that only the Chancellor has
the authority to contract for the University unless authority
is delegated elsewhere by University
Policy #62.
Anyone else who enters into a contract that purports to bind
the University or its subunits is acting without authority and
can be held personally liable for the contract.
>"Are
there certain things that cannot appear in the University contract?"
Yes. The
North Carolina Attorney General has determined that the following
types of contract clauses are prohibited:
1.
Limitations to the contractor’s liability for nonperformance.
When a contractor fails to perform its obligations under a contract,
it can be sued for damages. Sometimes a contractor will try
to put language in a contract that limits the damages owed the
university in the event that the contractor fails to perform.
Such language is prohibited.
2. Hold-harmless or indemnification clauses in favor of the
contractor. These clauses generally provide that the University
will pay money to the contractor in the event that the contractor
is injured in the performance of the contract by a party for
whom the University is not normally responsible. The clauses
normally are clearly labeled as hold-harmless or indemnification
clauses. They appear often in contracts. Contractors that do
business regularly with state entities are used to having these
clauses deleted from their form contracts.
3. Acceleration clauses rendering all payments by the University
under the instant and all other contracts between the parties
due upon the contractor’s finding of default by the University
under the instant contract.
4. Waivers of the limits of the University’s liability
established by the North Carolina Tort Claims Act.
5. Clauses rendering the contract subject to the laws and
the legal forums of a state other than North Carolina. These
clauses appear often in contracts. Most contractors that do
business with state entities are used to having these clauses
deleted from their form contracts.
6. Clauses that alter the North Carolina general law of contracts,
such as reducing the time in which to bring a suit for damages
otherwise allowed by the North Carolina statute of limitations.
7. Binding arbitration clauses.
8. Clauses authorizing the contractor to assign the right
to receive payment from
the University under the contract while raising a bar to assertion
against the
assignee of counterclaims and other defenses with respect to
the assignor’s
deficient performance or nonperformance.
|
