Contract Basics 101 from UVM Legal Issues in Higher Education Conference

good afternoon we're going to go ahead and get started I'm Steve McDonald from mland School of Design Charles Carletta from RPI um and we're going to talk about the exciting issue of contracts um and it is it's much more fun than you think um so we have a little dedication um first of all this is dedicated to all of our clients probably at least once a day if not many more than once a day someone walks into my office holding a piece of paper like it's toxic waste um or more accurately or more more commonly nowadays they just send it to me with that awful paper clip symbol I've come to hate on email um with the sentence could you just take a quick look at this contract and tell me if it's okay the subtext of which is it's a 15 page 8o font um single spaced contract um it's been sitting on their desk for the last three months the vendor is going to be there in 20 minutes um in my fantasy world the conversation goes something like this sure just um let me ask you a couple of questions start what are your goals here what do you hope to accomplish with this contract I just get this strange look like why would you be asking me that have you read the contract what you know and I just hand it back to them and say it's not okay I don't need to know anything more about it it's not okay um that sort of dynamic happens to lawyers on campuses all across the country every day and it reflects a fundamental misunderstanding of what it is that contracts really are about and how to deal with contracts so that's what we're going to talk about here um U this is sort of contracts 101 so most people those people who are coming into my office with that toxic waste piece of paper think of contracts um as looking something like this it's just you know a big trap um obviously something that nobody should have to deal with uh you know sign here and you're going to get caught um and so let's just give it to the lawyer because he can get caught in the mouse trap um uh from a legal standpoint this is what a contract is it's quite simple it is simply an agreement between two or more people that is enforceable by law that's all we're talking about here many of them do look like this um very small font single space very hard to read um uh barely you know if you read it you're wondering is this even English we're talking about um and a lot of them do look like that on the Sten like mine yours that's what he writes so um on the other hand it can be as simple as this this is a um letter uh from something called the Boston American Baseball Club League American League Baseball Club to some guy named Mr George H Ruth um dated June 11 1918 uh dear sir we agreed to pay you the sum of $1,000 if you should win 24 games and the additional sum of $1,000 if you should win 30 ball games as a member of our club during season of 1918 Yours Truly Boston American League Baseball Club HH frzy accepted Mr George H Ruth one sentence and if you are from around this area you may think this is one of the greatest contracts ever written um a single sentence this is what gave the babe the incentive um that led to winning the World Series and the next year Harry frase sold him to the damn yanies and the curse of the Bambino started um that's a contract one it's a letter one sentence that's all it needs to be a contract it can be literally that simple um uh these are both contracts people frequently say oh we don't have to worry about that it's a memorandum of understanding or letter of intent the the label at the top is totally irrelevant if there is anything in the document that is contractual in nature or the parties have agreed to do something even if it is only to have good faith negotiations there is a contract to have good faith negotiations it is not something that you can ignore the label on the top is totally irrelevant um just don't I if you ever are my client I never want to hear we don't have to worry about it it's a letter of intent um um now that you've been here I'll hit you um I'm sure you've all seen these and signed or agreed to these kinds of contracts the uh click through agreement on some piece of software or the terms of service um that simply by accessing a website your use of the website is subject to those terms of services those are contractual agreements you are committing yourself to something and perhaps your institution to something uh every time you click through those I'm sure you read them every time um you may not realize this that when you you know when you buy an airplane ticket you get that nice little well you used to get that nice little piece of cardboard now you have to do it yourself um but there may actually be in United's case a contract that's more than 40 pages long um that comes with that you can look it up on their website I can pretty much guarantee you would hate all the terms if you read them um but it's a contract and by entering into that transaction you agreeing to a whole bunch of terms um can be as simple as a purchase order or an invoice um on the right hand side we have an invoice from lawn's Car Exchange to some guy named Senator Harry S Truman He bought a Chrysler Royal Club Coupe and a Chrysler Windsor four-door sedan both with radio and heater $98 extra um you had to actually buy the heater back then um and with his trade in for the grand sum of uh two cars for the grand sum of $2,700 um outlines the basic terms of an agreement that's a contractual relationship between that car company and Harry Truman He gave them help um this is a contract it's very difficult one to get out of um can be as simple as this a handshake with no written document that can be contract um one of my favorite contracts this is by Ros chter R deam we're very proud of her New Yorker cartoonist um you fill in your name here hereby Grant the entire complete rights to everything you've ever thought made or done to Acme company in perpetuity and throughout the Universe and even if one day they find a door in the universe that leads to a whole new non- universe place or if somebody invents a Time stopping machine so that perpetuity no longer exists or everything falls into a black hole and nobody knows which end is up and we're all dead anyway so who cares we'll still still own all of those rights so stop whining sign or don't sign but it face reality for once in your life because this is the way the world Works pal many of the contracts you have signed say essentially that um and it's a contract um so uh those are all we've looked at a lot of contracts what does it take to make a contract is actually a quite simple process um legally you need just three things to have a contract you need something called an offer something called an acceptance and something called consideration um legal terms let's talk about what they are so first of all an offer the person who wants to enter into a contract makes an offer proposes something I will do something if you do something I will do something if you don't do something I will pay you something if you do or don't do something whatever it is you want this is a you know um some sort of business deal and you as the offeror you are the master of your offer you get to propose whatever it is you want to do next you need um the other party to accept okay it can be as simple as that um it could be in any form um it could be a written document yes I I consented the contract it could be possibly a handshake um in some cases it could simply be by going ahead and doing whatever it was that was proposed um I I say to the guy next door the Kid Next Door I'll give you 25 bucks to mow my lawn he does it he's performed the contract and that performance was an acceptance we had a deal um and and his performance was the actual acceptance of it so that can also be quite simple and the last thing is consideration in consideration of X I do y in consideration of Y you do X whatever it is um that the parties are exchanging is consideration there has to be some form of exchange now it doesn't have to be anything in particular there's an old common law case um in which Old English Court um described what they called the pepper corn theory of consideration um and as long as something even as trivial as a pepper corn is exchanged um that's enough to to bind the parties to the agreement they have to exchange something it doesn't have to be equal in value it doesn't have to be a great deal but something has to go back and forth so the bottom line is her contract basically what a contract is is a bargain between two people in the sense that it's an agreed Mutual exchange of something it does not necessarily have to be a bargain in the sense that it's a good deal for both sides or that it's fair um there are many horrible contracts that are still perfectly um enforceable contracts they are Bargains in the first sense but not in the second so what does it take to make a contract um we uh or excuse me what doesn't it take to make a contract you need the offer the acceptance in the consideration well really pretty much nothing else you you're done um you do not need to have a negotiation it's nice to have a negotiation but there's no requirement in contract law that only contracts that actually are negotiated um are enforceable so for example those non-negotiable forms like end user license agreements the Google terms of service in the Adobe um uh and user license agreement they're still enforceable now if it is if the contract is truly non-negotiable you're given a form and you know like Ros chass has sign it or not but I don't care um we're not going to negotiate it there is one thing that courts will do um if there is any term in the contract that is unconscionable it shocks the conscience not unfair not really incredibly one-sided but truly shocks the conscience and remember we're talking about shocks the judges conscience and they're pretty jaundice people they've seen lots of things so it takes an awful lot this is you know the firstborn son kind of clause the courts will strike those things out but the court is not going to step in and make sure that you got a good deal it's only when you know your firstborn son has been sold to to somebody that they will strike that out um bad deal too bad that's your problem you you agreed to it um so Dilbert the source of all wisdom I didn't read all the shrink license agreement on my new software until after I opened it apparently I agreed to spend the rest of my life as a towel boy in Bill Gates new mansion call your lawyer too late he opened software yesterday now he's Bill's laundry boy must be dangerous for lawyers to Iron Pants they'd always have a hand in a pocket I love lawyer jokes so um feel free to tell me your own um next thing you don't need uh in most cases is a written document um there are certain things where there really does have to be a written document contracts for the sale of land for example we have this whole system of recording land transactions and there has to be something in writing um there are certain contract uh cop copyright issues where there really has to be in writing or it's not enforceable um but in most cases it really doesn't matter if there's a written document um there is a thing called the statute of frauds that actually requires most contracts to be in writing but there are so many exceptions to it that it's in itself um pretty irrelevant so most of the time it really doesn't matter if you actually have a written document or not that handshake um for most cases will be sufficient to be a contract if you have negotiated and you do have a written document it's totally irrelevant whether the written has anything to do with your negotiations no one's going to step in and say you know we want to make sure that you actually the course of your negotiations whatever that end result was is in the written document that's your job not the courts not anybody else's um if you have a written document you've negotiated it and even if it is consistent with what you've talked about it doesn't matter whether you've read it no one no one's going to say it's it's enforceable only if you've read it no one is going to say it's enforcable if you only if you've read it and you understand it not required that you understand the agreement you're signing um in most cases it doesn't even matter whether you've signed the contract again there are few cases where that is a fundamental legal um requirement but uh for most cases most of the kinds of things you're going to be dealing with on a day A-Day basis probably don't need uh to be signed in order to be enforcable um again it doesn't matter whether the terms of the contract are fair and reasonable it's your job to ensure that the terms of the contract are fair and re reasonable it's nobody else's job a court is not going to step in um and save you from a bad deal that you have signed and not read and not understood and um and so forth um again Dilbert negotiations so far we've agreed that my company will take all of the expenses and all of the legal liabilities your company will get all the revenue patents in Public Credit I've seen many of these contracts too where it says I will dig you a swimming pool with my bare hands I will not do that okay you win you can use a spoon um that would probably not Shock a judge's conscience um judges are as I said very jaundice people and that is probably um as one-sided as it is it is probably a perfectly enforcable legal contract so really the only thing that matters um uh from contract law perspective is that the parties have manifested their Mutual Ascent that's a a contract term they have done something to indicate that yes they both intend to enter into this transaction embedded in the document or not um uh and and that's manifested their sent from the perspective of a objective Observer if you say yes I agree to this contract and you didn't show them you know that behind your back you had your fingers crossed it doesn't matter if they believe that you've accepted the contract and you know an outside Observer would think you had done it that's sufficient so it's quite easy um to enter into a contract there are very few requirements to enter into contract really you just need that offer acceptance consideration once you have that you probably have a contract one other thing that it doesn't take for cont contract is a lawyer um the man at the head of the the conference table would everyone check to see they have an attorney I seem to have ended up with two um uh it's nice to have a lawyer look at contracts but many contracts by far the majority of contracts are entered into without any lawyer ever looking at them at least on your side some lawyer probably drafted them all those terms of service and so forth um uh but there's no requirement that it be negotiated by an attorney reviewed by an attorney blessed by an attorney um you you are perfectly capable of entering into to contracts without that and frankly you don't always need an attorney for that um for complicated contracts you probably do but there are lots of really simple contracts that don't take an attorney that that Babe Ruth letter you know why pay a lawyer a whole bunch of money to read that it was pretty simple so what should be in a contract um well I tend to think of of what should be in a contract in the terms of sort of the journalist questions so I think of uh well actually this um first of all the My metaphor for contract um is that the the best way to think of a contract is that it is the owner's manual of the relationship between the parties you should have this nice document that you can open it up and it will tell you exactly how things are supposed to work how to operate this relationship and that even at the back of the this document um they've thought about what happens when things break how do you fix them the idea being that the contract is supposed to be the parties are supposed to have thought through exactly what their relationship is and and documented it everyone's on a common understanding the goal of a contract um you've probably heard the phrase a meeting of the minds the goal of the contract is for the parties to have thought through their transaction their relationship their business deal whatever it is and they've come to a true meeting of the minds they both understand um what it is they hope to accomplish the more you can do that the more you can actually think it through upfront and get it documented the less likely there will ever be a contract dispute because the biggest source of contract disputes is when the parties don't have the same expectations they made assumptions Oh They'll they'll take care of that nobody asked about that nobody wrote it down um and and the other party did not have that expectation the more things that you can think through the better off you are and the far less likely you will ever even be in court or in a contract dispute the goal is that Meeting of Minds on the business relationship so as I said I tend to think in the journalist terms and so I think that a contract should answer these questions you know who what where when why and how um and I a couple more from my lawyer perspective how much and what if so let's talk about those um who who are the parties to the contract it's usually clear but not always and usually the first Clause specifies who the parties are it may also specify um who are what are called third- party beneficiaries if we have a contract between us but there's a third party who is the true beneficiary of whatever it is they may or may not have rights under the contract and it would be spelled out in the document um who it is who has the rights to enforce this agreement fairly simple but um often missed the what this is the guts of any contract um what are the rights and what are the responsibilities of each of the respective parties um who is supposed to do what what are the specifications um you know if it's a piece of computer software um are there a whole bunch of parameters of things it's supposed to be able to do whatever it is that's supposed to be this is usually the vast bulk of any contract um a lot of Clauses spelling out that you know some does something somebody does something else the um Machinery or the software or whatever meets certain specifications whatever those things may be um if they're important they should be written down where um sometimes it's important that a contract be performed in a particular place if I'm hiring a performer a concert for a concert for example I want them to show up at my concert hall they need to be in a particular place on the other hand it may not be relevant at all if I'm hiring somebody to do some um writing or editing for me for Grand proposal I really don't care where they're sitting it could be in Singapore it probably doesn't matter if it's important though we should talk about that and we should document you know yes you need you need to show up in my concert hall for the performance when also very important um thing several things show up here first of all what's the term of the contract is this until the work is done is it a one-year contract is it renewable does it renew automatically unless it's cancelled or does it renew only if we agree to renew also what are the deadlines are there are there specific deadlines um timelines Milestones where things have to occur if those are important those should all be spelled out as well thought through and spelled out why this is sort of a weird one um contracts actually don't there doesn't have to be a clause that explains why the contract is there but it often shows up in contracts old style contracts you've seen um usually start off with whereas blah blah blah that throat clearing kinds of stuff it seems um what's actually happening there and it can be useful um is that the parties are explaining what the general goal of this relationship is so if there ever is a dispute and and the court is trying to interpret um the terms of the contract um it'll have some guidance um uh this is this is where we're we're heading so I'm going to try to interpret the terms those ambiguous terms to head in whatever that direction is so in my contracts when I write them I don't do whereas whereas whereas I just you know as often you know we agree as follow as one background here's what we hope to accomplish number two here's who's doing what kind of thing how um the actual method of performance may be important um if I'm uh hiring an artist to do a portrait I might want an oil portrait you know not a charcoal sketch I should spell that out sometimes if it's a truly an independent contractor thing I don't care I'm leaving it to their discretion their their experience and wisdom if that's what I want that's fine but we should think that through uh and and if it's important get that documented how much um obviously always important how much is the contract for who's who's getting paid how much when what terms um do we pay all up front do we pay at the end do we pay progress payments can structure these things any way that you want to um but should be thought through and then what if finally um this is the stuff um in the back of that that owner's manual if something breaks down what happens can I sue you can I sue you only for for certain kinds of things do I have to give you notice that you've screwed up something and an opportunity to cure is that opportunity 30 days 60 days 90 days any of these things again are fine it doesn't really matter from the L's perspective none of this matters but you need to figure out something that works for you you know the parties might want to have an agreement where they have agreed we'll try to fix things ourselves or they might want to say no we simply go straight to a lawsuit you might want to talk about is an injunction available um are there liquidated damages what are called liquidated damages we don't have to worry about trying to calculate things we just agreed ahead of time that this is the penalty um for something um now if you've been following what I've been saying um you will you will agree with the statement I'm about to make which is a contract is not a legal document everyone who's coming in with that toxic waste piece of paper believes that a contract is a legal document and only lawyers understand them only lawyers know what to do them a contract is a business document that is enforcable by law the guts of the contract are the business deal lawyers don't know what the business deal is all those questions I asked about none of them are legal issues they are business questions who what where when why and how so when people come in and say could you take a quick look at this document and tell me if it's okay and I say what are you H hoping to accomplish and they don't know I know it's a problem because it's not a legal document it's a business document and they have no clue what the business deal is that they're entering into that's a problem I can't solve that problem I can ask a lot of questions to try to parse out the business deal but I can't I can't make those decisions um so I love this quote this is what I think of when they come in um you got to be very careful if you don't know where you're going because you might not get there if you don't know what the business deal is I can pretty much guarantee it's a bad contract because you have not thought through what the business deal is there has not been a true meeting of the minds we are headed toward a very likely dispute at some point my version of that is this if you don't know what it is that you want if you don't specify in the contract what it is you want you're going to get whatever it is the vendor wants to give you and that may or may not be what you were hoping for you were simply throwing yourself on the mercy of the vendor and accepting whatever they give you and you have no basic um uh no basis for dispute if it's not what you wanted um one other uh quote if you've ever been on an airplane in the last 50 years you have seen the ads for um Chester Caris same picture this is the original Dorian Gray um uh you don't get what you deserve you get what you negotiate absolutely true there is no one looking out for you but you in these deals your lawyer can help you with that but the other side who's giving you a form contract you can be awfully sure um in almost every case that it is not going to be written favorably to you you need to negotiate it and even if they say it's not negotiable almost everything truly is negotiable um your wife's asking that you rot in hell for eternity but I think that's negotiable uh you should try to negotiate these things if it's not if it's not something you want you need to talk about it or decide not to do it not just simply sign and trust that you will be okay um so what should be in a contract um just to summarize uh what we've been talking about there really isn't any magic language here it doesn't matter it doesn't have to be that dense legal ease like that first contract the real point of a contract hopefully um is to be as clear and as uh complete as possible um and as plain as as concise as possible um the goal again being to avoid misunderstandings and disputes you want to make sure that both parties have that meeting of the minds they have understood what their relationship was and the closer you can get to that it's impossible to ever anticipate absolutely everything but the closer you can get to that the better off you are the less likely there will be a dispute um if there is a dispute it is not what you personally think the contract says it's not what the other side thinks the contract says it's what an outside objective Observer which is say the judge thinks the contract says and the only thing the judge is going to look at in almost any case is what lawyers think think of as the four corners of the document you can come in with 50 Bishops as Witnesses and they can put their hands on a stack of Bibles and say I saw the negotiations this is what they were supposed to do and the judge will say that is irrelevant evidence I'm going to exclude it it does not matter the only thing that matters is that if there is a document that written document and the court in almost every case is going to look only at that document the course of the negotiations none of the other stuff matters um I frequently say well yeah but that's too hard this is an organic process it's new we really don't know how this relationship is going to play out so we just can't specify details now we just have to let it play out to which my response is compost is an organic process it's a process of deterioration um if that's what you want fine but just understand that you have just entered into a relationship that is almost certainly going to deteriorate you need to specify things up front if it truly is so organic you don't know what's going to happen you at least need to specify a process for how those decisions are going to be made by whom they're going to be made and not just leave it to the vendor um to do whatever the vendor wants I also hear this a lot oh but we're we're important to them they'd never do anything bad to us um yeah we talked about all these things they didn't put in the contract but they they won't screw us they're you know we're very important to them and and I channel on a very rare occasion I Channel Ronald Reagan trust but verify um if they say oh you know we won't enforce that or we'll do this and they won't put it in the contract what they're telling you is No in fact they won't do it get it in if it's important get it in the contract um do not rely simply on the trust factor I don't want to be dealing with someone I don't trust in the first place um trust is an important part of any contract and it is helpful um if I don't trust them I won't enter the contract at all but I'm also not going to rely simply on trust to protect my rights it needs to be in uh preferably in a written document um if it's important to you now at some point um you can never you can never anticipate absolutely everything you can't get everything pinned down and at some point you simply have to jump out of the airplane and hope that the parachute opens um but you you do that only after you've made sure that you know that the person who packed the parachute knows what they're doing you've taken the appropriate precautions um and so you get as close as you can um to that that ideal meaning of the minds so now with that background um we're going to look at some actual contract language and I'm going to call on people um we're going to start off first of all just reading contract terms and then we're going to go to some negotiation stuff so take a look um what's wrong with this picture these These are actual modified slightly but actual terms out of contracts that people have brought to me to review so subject to the terms and conditions here in seller agrees to sell and deliver a buyer agrees to purchase and receive from seller buyers full facility requirements of natural gas the price set forth on the face of this agreement applies only to those monthly contract volumes set forth on the face hereof on a daily ratable basis seller shall utilize has its best efforts to contract for gas in accordance with buyer's anticipated actual monthly SL daily usage however in any month if buyer's actual daily usage exceeds or is less than the daily ratable contract volume for that month seller shall price the excess or deficit usage at a daily market price instead of the contract price this is what's known as a requirements contract you're you're agreeing to buy your requirements for something whatever they turn out to be and this the seller is agreeing to provide them to whatever they U agree to be what do you think about this is this a good term but you can be the first one well well for openers we have no price parameters at all do we all agree on that and I haven't seen this before but Stephen is right you see these when when you're buying things as your needs require you got to have price parameters you got to have actually if you just follow his checklist what's the price where's it being delivered when um just go through the checklist yeah okay so this one the key for me on this one you'll notice all these things that are capitalized um phrases they're all defined terms and if you go and read those it's even more impenetrable language now the person who brought me this contract is the guy who buys energy for for Ry and he actually had read it he's an expert in this field he had no clue what this meant that was the problem with his contract um it is absolutely impenetrable language and when you start following all the cross references and things it's impossible to understand what what what they are saying here that's a problem I gave him credit he actually read it and knew that that was a problem got this contract someone said um came in and said i' i' I've read this it looks pretty good what do you think search firm is pleased it was a letter agreement search firm is pleased to have this opportunity to assist you in your upcoming search for the position of associate vice president of something the contract fee is invoiced in three equal installments the first invoice is sent at the start of the search second and third fee installments are built in 30-day intervals there after cancellation of this contract and any all obligations may be caused by other party you can terminate for any reason upon 30 days written notice the other party upon cancellation of this contract the contract for you will be prated to the point of cancellation what do you think would anybody sign this this is pretty much the entire agreement you're shaking your head why why not exactly um uh anything else is a problem there well that's not true they told you they're going to get paid well yes well that in fact that is my translation the one thing we guarantee we will do here is we will get paid what is the timeline for searches more than 60 days they're paid all their fee upfront we can cancel after that but there's no refund and what are what are we what are they going to do so I talked to the person who sent this well are they are they writing the position description are they running the ads are they soliciting the candidates are they doing the initial screening are they making the travel arrangements are they doing you know all the kinds of things you're asking about I have no clue they're happy that they get to help us you know I'm I'm delighted they're happy and they're going to be paid up front but this this is a horrible horrible deal another search from contract we got um we proposed the following search plan um a number of things listed each one of those had a whole paragraph explaining what it was going to do goes on for two pages pretty good one right this is actually my translation of this one I love these guys um and this was one where I knew instantly reading the contract I had as even as a lawyer I had uh some trust in these people because actually had spelled out this was their for agreement they had spelled out clear promises um whatever eight different things uh uh with with text explaining in detail what it was I could understand what they were proposing to do and they were actual Promises of actual work product that they were going to do I had trust UPF front this was not some one-sided document written by a lawyer just to hope we didn't notice these were people who really you know were making a true promise that's a good thing um same contract goes on the first invoice will be sent with the contract will be onethird of the total fee that's our retainer the second invoice will be a third of the professional fee and will be sent after the committee meets with finalist candidates the third and final invoice will be after a signed contract again this is great that's exactly in my perspective what it should be they've got some upfront costs I'm happy to give them a retainer so they they can run ads and you know do all those kinds of things but they are being paid basically as work is getting done and we have all the way to the very end a third of the money to hold on to so that if they don't do what they've promised we've got leverage the first contract all every bit of the leverage was in the hand of the vendor we had zero leverage after the first 60 days and and there was nothing they promised to do anyway so we couldn't we couldn't do anything here they've made a number of promises and they've given us the ab to hang on to some of the money till the very end this is wonderful I really this is a firm we've used many times I love these people um so here's a software um uh uh license U and and a consultant so design initial setup and implementation fee for year one which is the year 2011 onetime setup design fee for the software program which includes design implementation programming training hosting license maintenance and data lots of things they're they're saying they're going to do um importation of a properly formatted database 50% % of the fee is due within 30 days upon execution and delivery of this agreement the remaining 50% is due onor before March 31st 2011 what do you think about that you're smiling so tell me what do you think about that what's your problem with that regardless of what and regardless of when is there any timeline there's a timeline for money is there any timeline for any of those things they've made they've said a lot of things they're going to do but um they could do that on December 30 1st I I could sue them if they didn't do it on December 31st but I'd have to wait till then there's no timeline no deadline no Milestone written down here if that's important which if you've ever been in software installation is extraordinarily important it ought to be written down we ought to be on the same wavelength about that another software consultant time is of the Ence in this agreement software consultant shall deliver the services on a timely basis in accordance with the time schedule set forth in the project plan you probably can guess my translation of this one I love these guys too um this was another this was a software consultant where they did they had a timeline um you know those bar graph things whatever they're called um there was an actual project plan that spelled out you know in sequence how things were supposed to happen and they said they would do it not only they would do it in according to that but on a timely basis in accordance with that time is of the essence in this agreement that gives me something extra if they screw up um to deal with them to hold back money to sue them for um these people are making actual commitments and they were we understood we had worked out the timeline um that's what the parties understood Our IT people knew that's what they needed and what they could accomplish these people promised they would do it that's what's supposed to happen did I as a lawyer know any of this stuff if when somebody first would walk in with a with a piece of paper I have no clue what Our IT department needs I can ask them you know do you have a timeline but I would have no way of knowing that and if if they haven't read the contract they haven't thought about the contract again it's clearly not um okay at the beginning by placing an order of this is an actual contract uh term contract by placing an order via this website on the first day of the fourth month of the year 2010 anod Domin you agree to grant us a non-transferable option to claim for now and forever more your Immortal Soul should we wish to exercise this option you agree to surrender your Immortal soul and any claim you may have on it within five brand five working days of receiving written notification from gamestation co.uk or one of its duly authorized minions you will you you may um have a slight clue in the fourth the first day of the fourth month I mean this but this is an actual software license for Game Station something some kind of software um and uh basically they were just seeing if anybody was paying attention um I think this would be one of the unconscionable terms that a court would strike down in in a software agreement um but the amazing thing is I I forget if it was only hundreds of thousands or millions of people clicked yes that's what happens um so this was an agreement for a a we were Outsourcing something to the cloud they were going to be dealing with with certain kinds of data and so forth cloud service provider will not be liable for damages arising from any breach unauthorized access misuse of or intrusion into the customer data residing on cloud service providers equipment did you sign this you you're looking intently like I don't skeptically would you sign this who's in charge of the data under this they are I have no control so that's exactly the conversation I called up their lawyer and I said excuse me I don't really understand this Clause we're handing you our data your putting it on your Machinery you're in charge of it we have no control over that we don't do anything with it and you're saying if you screw up it's entirely our problem and he said yeah um uh our insurance company told us this is a black hole liability we can't take it on so you think that Ry is your insurance company basically I strongly recommended we did not do this contract um but that's what they're saying uh that they have no Li ility even for what they do and that probably would be enforceable as a risk transfer a legitimate risk transfer um agreement based on the risks involved and the money being paid and so forth they could make that argument and probably would be upheld state laws maybe some federal regulations might come into play on contract like this uh that that's a good point there uh well data breach notification if they had a data breach it might be even without even with this they might have the obligation to do the notifications if yeah if they if they haven't expressly excluded that but if it cost us millions in dollars in liability for whatever they did those statutes probably would not come in and protect us that's us or our insurance company or a data loss or data loss yeah those kinds of things um uh that probably excludes that and we're probably just toast at that point that's right um so uh the translation this we have no confidence whatever in our own competence that's basically what they're saying um buy or beware uh vendors liability here under will not exceed the fees payable within the past 12 months for the services that are the subject of the claim we're seeing more and more these kinds of things where they try to limit liability to what you paid them college acknowledges that the provisions of the section represent a reasonable allocation of risk that is reflected in the fees paid by college now this particular contract we actually were paying them nothing this was also a particular Arrangement that conceivably um uh although the primary liability would would clearly fall if there were any tort sort of thing um uh would fall on the other party somebody could sue us and particularly in Rhode Island where you can sue anybody for anything um uh uh so there was a real risk of of us having liability possibly millions of dollars worth of liability for what this company did that a good deal no so um again we think of you as the college liability insurance company so I had the conversation with this lawyer um and she told me oh I see um um you want some protection yes I like some protection so here's the deal we'll give you the the greater of the amount you pay us or $5,000 eventually I got them to say that they would add us as an additional insured on their insurance policy to up to $5 million even that theoretically wouldn't cover all of our Liv ability but it be so remote at that point um that I was comfortable so that's I me you have to go back and forth and negotiate to get those kinds of things they're not volunteering that they are trying to transfer every possible risk to you more and more we're seeing that um another uh cloud service one cloud service provider makes no warranty of any kind whether Express implied statutory or otherwise including without limitation warranties of merchant ability Fitness for a particular use and non-infringement you notice this is all in capital letters warranty disclaimers have to be in big print and in capital letters to do that anybody like this no the answer is no you don't like this why not though you know what this means exactly so this is for some kind of computer related thing let's say there let's say this contract had a whole five pages of specifications for what the the software was going to do it doesn't matter you can't sue them if it doesn't what if um has anyone here uh been involved in the Blackboard desire to learn sort of thing um Blackboard being the one of the bigger course management systems they um they believe the desire to learn infringe their patent rights one of the interesting things about patent law in the United States is if that's true they had the ability to sue not only desire to learn but everybody who used desire to learn so colleges across the country got these nice letters from Blackboard saying we're not going to sue you we think they're infringing our patents but we're not going to sue you yet but if you'd like to we'd be perfectly happy to license Blackboard to you for a reasonable fee contact our customer service people here this says if that happens not their problem the burden of infringement shows upon you falls upon you as well and any kind of computer related software related thing you want to have at the very least um uh uh a warranty that it will not infringe and if it does infringe it's their problem out yours they'll take care of it you want something that will say um that if there is a data breach um that it's their problem because they're in charge of this is cloud thing and if it it's something that has certain specifications they ought to at least warrant that the product will comply with the specifications what this however says is abandon all hope you who enter here we have no idea if this things works and we're not even sure we it that in that in English is what that says this is an actual also from an actual software agreement and this is this says the same thing as the other one in English we don't claim interactive Easy Flow is good for anything if you think it is great but it's up to you to decide if easy interactive Easy Flow doesn't work tough if you lose a million because interactive Easy Flow messes up it's you that out the million not us if you don't like this disclaimer tough we reserve the right to do the absolute minimum provided by law up to an including nothing this is basically the same disclaimer that comes with all software packages but ours is in plain English theirs is in legales we didn't really want to include any disclaimer at all but our lawyers insisted those damn lawyers we tried to ignore them but then they threatened to attack us with the attack shark at which point we relented that that that was in real software and it literally says exactly the same thing as that earlier the slide before this um they just had a sense of humor about it um this shows up in almost every contract um and you need to be aware of it this agreement contains the entire agreement of the parties with respect to it subject matter and supersedes all prior negotiations agreements and understandings with respect theto this agreement may be amended only by a written document duly executed by both parties anybody know what that means why it might or might not be important paron you have to agree on changes yeah that's the second sentence what about the first sentence anybody yeah what called zipper or integration Clause what what this says and there's nothing wrong with this this is actually a good thing um this is saying that no matter what the course of negotiations and if there are negotiations there's always back and forth or whatever the final agreement whatever it was is crystallized in this document and and and courts and forces they like this because it encourages people to put everything that is important to them in the document so that the only thing we have to look at is the document they're telling you exactly as you said what I said before make sure you've come to a deal and written it down um so what the um translation for this is if it's not in here it's not enforceable so all those salesman promises this is my other translation everything the salesman told you is a lie um all the salesman's promises that are not in the document they're not promises they're not legally enforcable promises I want to give this one a little teeth and and then we're going to answer your question okay um I saw an agreement once where a university bought a million dooll piece of equipment um a very complicated chemical analysis piece of equipment and the salesman um suggested actually guaranteed to the professors that this was state-of-the-art stuff and this was was a very reputable company that this salesman represented so the college bought the equipment for openers the equipment didn't fit in the room and secondly when the professors finally got around to turning this over to the lawyers the lawyers and doing some background check found out that the equipment was not only state-of-the-art it was Obsolete and the manufacturer wasn't even going to make it anymore what the salesman had managed to do was sell the last unit to the college now think about that in terms of that Clause the college was stuck with this unit because of the of the validity of the contract and it was only because the the attorneys convinced the CEO of the company that the ethics of this thing really needed to be dealt with or the college was going to take a full page ad out in the New York Times that they rescinded the contract and the company did resend the contract but in fact they had it so while Stephen and I make light of some of this stuff the fact is that college was out $1 million um so these Clauses are good for the reason I talked about but it's important to understand that what it means is everything that's important to you needs to be in the document the final deal needs to be in the document here's a variation of that this agreement and all documents reference to in is the party's entire agreement relating to its subject matter supersedes any prior contemporar agreements the term located at a URL and referenced in this agreement as may be modified from time to time by license or in its discretion are hereby Incorporated by this reference you're all laughing you know the translation of this one um the document I've just handed you is meaningless because they unilaterally can change it at will it's not a contract it it appears to be a contract it probably is for the first 5 seconds but if they choose to totally change the terms of the deal at whatever that URL is you've just given them the right to do that not a good thing when I see those kinds of URL things I try to get rid of them or at the very least say um that anything that is in the agreement that conflicts with anything in the URL the agreement prevails so that I have something you know there's some Bedrock um that can't be changed even if other issues can be changed um one last variation by signing below you acknowledge and agree that your authorized agent adviser has provided you with a complete copy of the application and client account agreement and that you have read understand and agreed to those terms as they are today is they may be amended in the future you got that one too so before you sign this contract talk to her um you've agreed to whatever they may you you understand whatever it is they might choose to um agree to the Future that one I think they you know probably Court might look quizzically at that one so uh those are some things now let's talk about negotiations um negotiation is really a very simple process is just talking back and forth until we get agreement that um is works for both parties some some things to keep in mind those negotiations as they say in The Godfather it's it's not personal it's just business don't don't get yourself too invested personally in the back and forth um it's perfectly legitimate to have different points of view and they're trying to make money you're trying to get a good deal um and that's you know that's just the way things are um as you're doing it though it's very helpful to try to understand what it is the other party is really trying to accomplish it may look like something one thing on paper but there may actually be underlying interests and what's called interest based bargaining or the getting TOS stuff if you're familiar with that um is to try to dig a little deeper and often you can come to to a real agreement if you truly understand what it is you're both trying to accomplish you may actually not be working at Cross purposes so if you can do that that can be helpful um so variation of that just be aware of what it is you really need your core interest where you you know sort of the the um drop dead point and also if you can figure out what it is the other party and then try to figure out um if you can come to a place where you can accomplish both of those things um and you know the goal really in a negotiation if it truly is a true back and forth is you're looking for the Goldilocks compromise um something where both parties have probably given up something they'd like um but we've we've found some place in the Middle where we both can live with it it accomplishes enough for both of us no contract is going to be perfect from each side's perspective that's not possible but you can probably get the goal at least is to get to that so um uh in your handouts you have a sort of a draft I I I wrote this draft publishing agreement um from a a publisher with a little bit of attitude um and now we're going to just talk about how you might negotiate so um this is a publication for a faculty member who's going to publish an article uh in a in a journal um and he is referred to as chop liver um chop liver hereby transfers all right title and interest in and the article including without limitation all intellectual property rights including without limitation all copyright rights to publisher which may Hereafter do whatever it pleases with the article publisher agrees to publish the article if and when publisher feels like it whatever publication or format publisher may feel like placing it with whatever edits and revisions if any publisher may feel like making all in their Sole and limited discretion right so you've just given them every everything all property you own here and total control over it anybody like that would you agree to that so chop liver's version might be something like this Publishers shall have the non-exclusive one-time right and obligation to publish the article as is as the lead article in the next print edition of really important Journal so not giving up property it's it's now a license it's a non-exclusive license I could you know well chop liver could shop at other journals as well they can't edit it they can't do anything it has to be prominent sort of thing seem kind of far apart what are they really looking for here um you know you might end up some where like this where chop liver gives um publisher an exclusive right retains ownership of the copyright rights but gives the publisher an exclusive right to publish the article with standard editing they're going to do that you know there are some people are really worried about their Pros but you know standard edting is going to be important um that right is limited to really important Journal not to um the first one would let them put it in you know a comic book don't want that um but also then to to reprint that and reformat that for electronic and so forth um and notwithstanding the foregoing chop liver will continue to have the right to reproduce distribute and make derivative Works based on the article um uh for Chop liver's future non-commercial teaching and scholarly purposes but not including publication and other journals what the publication really probably wants is to make sure that they're not scooped you know they've got the first rights um uh they want to have the reprints but if chop liver wants to use this in course packs They Don't Really Care um if chop liver wants to extend his research into some other field and write subsequent articles you know that's probably not a horrible thing um so this is something where they each get something the goal you know they've thought about it back and forth chop liver doesn't simply take the form contract they don't take his version but they've talked about it back and forth uh as consideration for this agreement shop Delver shall have the right to purchase reprints so that's good of the article at whatever rate publisher and its Soul unlimited discretion deems fit to charge but at no event less than the highest price charge to any member of the General Public the worst favored nation sort of clause here um chop liver May freely reproduce distribute and otherwise use copies of the article as he deems fit and he doesn't have to pay publish or anything so he can do anything he wants again probably not um something that the publisher is going to be wildly excited about but there are compromises so even if chop liver does transfer ownership which might be fine um he'll still have a Perpetual irrevocable and royalty-free license he he continues he Reserves what are called sort of like shop wres um to reproduce and distribute copies of the article to students enrolled in his classes um in nonprofit institutions of higher education if if it might be you know choer is perfectly happy to give up the article but still be able to use it in course packs again back and forth who knows but if that's acceptable to the parties that's fine uh chop liver may never again use all or any part of the article including any of the words there in in any way without the written approval of publisher which may withhold such approval for any reason or no reason at all you know the sorry you can't use it again we don't give approval um seems a little over broad um chop liver should be entitled to incorporate any or all the article in any future work uh as he and his sole discretion deems appropriate now obviously there you know the publisher has certain non-competition concerns here right that's probably what they're getting at chop liver has certain needs to use his stuff again including the word the' um so uh maybe um maybe we talk just about the article itself and we give them a window of exclusivity for three years chop liver can't publish this stuff anywhere else but after that you know there's there's a for sale date by uh on anything including Journal articles at that point he can do um that same work or works on substantially similar uh topics elsewhere but they've got some protection for a period of time to uh reflect their investment might be perfectly appropriate again they've hopefully they've thought that through uh publisher shall have a right of first refusal on all of chop liver's future articles other writings and thoughts on whatever terms publisher May in its Sole and unlimited discretion deem appropriate you know we want we like you as an author we want to we want to publish everything everything you've ever thought of your grocery list you know um your emails um chop liver might simply want to strike that Clause out and leave it for you know I i' I've given no um uh no options no nothing to them on Future Works again for for a midlevel thing um maybe you give them a a right of first refusal of some sort or an option to negotiate so in this example um for whatever his next publication is um you'll have the exclusive right not to publish it but to negotiate to publish it for 30 days we'll for 30 days we will negotiate in good faith whether you will take this article and on what terms and if for some reason in neg good faith negotiations we can't reach agreement then I can go out chop liver can go out and um seek other Publishers could still talk to you but can also look for other Publishers that might be fair uh this agreement should be governed by and construed in accordance with the laws of usbekistan any disputes concerning this agreement must be resolved by arbitration in a not litigation in a forum and under rules to be design ated by publisher in its soulle and unlimited discretion seems kind of one-sided um the choice this shows up in every contract choice of law choice of jurisdiction so chop liver might want any and all disputes concerning this agreement shall be resolved by chop liver's mother in her soul and unlimited discretion also might be just a little one-sided um this is one that that uh comes up a lot for State institutions you may actually not be able legally to consent to another State's jurisdiction and that that fight goes on when I was at Ohio State I had that fight all the time um even if you're not you may not want to agree to some far-flung jurisdiction everybody's always looking for the home court advantage so um you will try in the negotiations to get it to be your home court another Gambit that often is tried is well let's just strike this out and we'll argue over it later which is not a horrible thing one thing I've been doing lately and actually have gotten some vendors um to agree to is to say something like this if there is a lawsuit the plaintiff has to to file in the other jurisdiction whichever that is so if it's if I'm the plaintiff I have to sue in your jurisdiction if you're the plaintiff you have to sue in my jurisdiction what's nice about this Clause is first of all going into it I have no idea who's going to be advantaged by it and second of all because I have no idea who's going to be advantaged by it it puts one more little incentive for us to try to resolve the dispute informally before filing a lawsuit and almost always that is a good thing parties are almost always better off resolving you know settling their disputes um themselves Court Lawyers all that stuff is very expensive it's timec consuming is draining if you can do a a a a settlement of some sort a resolution a mediated thing um amongst yourselves you're going to be better off and so this is encourage it's one more encouragement for the parties not to file suit because before you file suit you have to say I'm going to the other unfavorable jurisdiction so I really don't want to do that let me see if I can work this out I personally think that's a good good thing and I actually have gotten some vendors to accept that so think about that um I think in the interest of time to to let you talk I will not um show this uh uh the URL is in your um uh materials this is about a seven-minute clip from the uh the movie A Night at the Opera the marks Brothers the contract negotiation scene it's absolutely hysterically funny and it is everything wrong about negotiating a contract so um I encourage you when you go back to your hotel rooms or whatever fire up your browser look at this and hopefully you will now know exactly what grouo and Chico did wrong um in their negotiations but um I'm going to give you um some time to make your comments and then we'll hopefully have some time for questions well you go ahead and ask your question while you're hot with it come all the time um and the client contract most business contracts have those kind ofms they're all and and they usually don't want to negotiate you advise in situation I ADV if you accept this contract pretty much but most contracts have that is firm they want to do business with how do you deal with um it's very hard so first of all what I do is I those translation things I tell them that I mean you need to understand this is what it means do you do you want that and so that one um the cloud service provider we have no liability the client still said oh but everybody uses this product we need it it's important to us and so I I documented that i' given this advice but then we also had a conversation are there ways that you can make sure that the data that goes in there is not the kind of data that would raise data breach notification things for example this was for a personnel um application system can you say on your form do not write your social security number down we really have no interest in it that helps you know were there were there ways to um if if you if it's really that important you have this particular piece of software because everybody uses it um and they're good people um are there ways that we can not through a legal way but through a a business um method way reduce the risk so I then had that conversation and I made sure I documented everything so that when things fell apart which haven't yet I was clear that I had given advice that this was a really stupid idea now we for the rest of the audience we have two lawyers having a conversation here all right let me give you a little background because I was going to cover this point anyway there is a a set of contract statutes that govern general terms and conditions across the country and it's called The Uniform Commercial Code it is the contract law it started out as a negotiable instruments law but it's the contract law for all 50 states so the terms are uniform and one of the provisions in this statute is if you print in your contract a set of words and they give you the exact words you can actually say that this product I'm selling you won't do anything it won't do what you're buying it for I'm not saying it will do what you were buying it for it won't do anything and if it does nothing I'm off the hook you accept it in that manner that is in fact a statutory provision and so when you see that large print it's there for a reason it's not because someone's trying to get your attention it's because they're trying to comply with the Uniform Commercial Code and and you're stuck with it now I'll add one more you will see the term Asis in larger print than that two words bold print underline that's a statutory provision if you buy something as is and it's done correctly you get it the way it is if it doesn't have an antenna on it and it's and it's supposed to that's your problem now why do I make these points at this point and we're going to we're going to do this quickly because Stephen and I designed this so that you could ask questions it is this those of you especially from small colleges Contracting is not something one does casually it's something that's precise and is governed by statutory language even when you don't recognize it it's also governed by custom when you don't recognize it for instance in the publishing industry when you hire an artist to design a trademark or a logo for you in that industry they own the master you don't so the rate you negotiate with them doesn't include that if you want to own the master you have to say that in that industry and usually you pay extra for it now I'm making these points because in the small College Market Market you don't get access to lawyers you need to find a way to do that and the lawyer you need access to is someone who does this kind of work you need to think of lawyers like you think of your Physicians you go to a podiatrist for a foot problem not an eye problem the same is true with contracts Stephen has made the point rather graphically um statuto terms come to us in a variety of ways lawyers have taken to adding this limitation term for no reason whatsoever we refuse to be respons responsible for your special consequential and incidental damages you ask yourself why would anybody put that in there and the answer is there is no reason everyone has Insurance there is not an insurance policy on the face of the Earth that doesn't include incidental consequential and special damages but lawyers have taken to putting that putting that in there when it's in there you've agreed to it and if you've agreed to it when there's litigation you don't get to recover the bulk of the claim so why would you do that um step made a point on who the parties are the part the contract is not between your physics department the contract is between the university the legal entity and the other side are the Contracting parties I make the point because I see it every day the arts department contracts to buy um a projector for the sum of $113,000 there is no arts department the only people that don't know that are the arts department I want to uh s those of you that Eng get involved in search contracts the vetting process is something you want them to do look for that they can cover non-discrimination issues that you cannot cover in interviews they can ask questions you cannot ask they can talk to people you cannot talk to they come up with some of the people that are free of liabilities that will haunt you later on I covered publishing contracts general terms and conditions I've given you hours feel free to modify them and use them there are some catchphrases in there I want you to be aware of by the way it's the small print stuff appr propose of Steven's earlier comments this is a handout you will notice that I require indemnification of us to the fullest extent required by law that's because New York has passed actually the court of appeals our highest court has said if you overreach on indemnification no matter what you put in the contract is no longer valid you've lost it all just by overreaching and so you cover that with buzzwords my point here is the buzzword are the buzzwords are known by lawyers and so you should try to reach out insurance is important people coming to your campus to do work have to be covered in some states if someone comes to your campus as an independent contractor and they do work on your work and they're injured some states label them your employee for purposes of workers comp you need to know know that for purposes of your insurance premium and you also want to delineate that in your contract the other thing I've given you is some procedural stuff I like you to have things to take home internally you need to know how to delegate contractual Authority and when you have delegated authority with spending limits put it on your website so that you eliminate the question later on in litigation about implied Authority well I thought he could sign the contract have it on your website here are the only people that can sign contracts at this institution if the amount is a the person is X if the amount is above a the person is y if the amount is above above that then it requires two contract signatures put it on your website and make sure it's there in decent Siz print um I gave you a little list of questions that you use internally to ask the people who send you internally The Proposal so the physics lab wants you to buy some gas spectrometer you want to know why you want to know and they've identified the vendor they want the Brooker model 412 well guess what veran makes one and other people make one and if you receive federal funding then you're not allowed to just buy it because somebody wants it you have to ask the questions if this is a soul Source why is it a soul Source the people that know that are your internal people if it's not a soul source and you receive federal monies you can't do business that way I've given you a list of questions questions you should ask internally the other demon you want to watch out for is export control those of you in the research game if you're buying a piece of equipment that is controlled controlled means it's on a government list there are three agencies that publish lists each of them are independent of the other if the equipment is on one of those lists there are some students and some faculty and some Consultants that cannot use that equipment you need to know that your professor need needs to know that have them identify it upfront and at this point I want you to be free to ask questions because everything else is all lawyer stuff um I like the way Stephen handled the uh dispute clause about going out of one jurisdiction into another another um you'll look when you look at my list you'll see a paragraph labeled cancellations those of you that do hotel work watch out for the custom in the hotel industry it's printed in the contract but watch for it if you cancel the contract there are penalties you pay them if you never show up you pay them no matter what look for that sometimes you can negotiate that out sometimes you cannot you'll notice I have affirmative action language in my contracts if you receive federal funds for any reason whatsoever except student aid you have to comply with the federal acquisition regulations I've given you some of those in my general terms questions for either of us could you explain a little bit more about consideration part of the contract because I thought that was payment or something that exchang hands basically that's what it is there has to be something flowing something of benefit flowing in both directions no matter what it is payment a pepper corn whatever uh in con it may be understood best in contrast a a pledge to give somebody money um without anything coming back in return is technically an unenforceable contract there are ways you can you can figure out a way to have some form of consideration um like in Reliance on your pledge we are going to do something and that may fill in the gaps um but where it's just where something the only benefit is flowing in One Direction it's un enforceable if as long as some benefit payment a peppercorn whatever it is is flowing in both directions and it could be you know $10 million for a peppercorn that would be fine um that's what makes it consideration which is the third part of the contract so but the shaking of a hand where's consideration uh uh if if you mow my lawn I will pay you $25 let's shake on it the shake is simply the okay you know the the acceptance um consideration is the flow of value there has to be something exchanged at that time no it has to in a contract it's just recited the recitation is required and there has to be in that recitation something that's going to change hands if if I will pay you $25 to cut my lawn Shake on it contract is made consideration is recited and I will pay you $25 if you cut my lawn today I will pay you $25 10 years from now that would be okay the timing is irrelevant right okay we're oversimplifying of course anyone other questions contracts good for you um and then initial and all that ja but I never feel good about that I mean in terms of um feeling like I really have something I can enforce against that vendor after should I requiring that we re that that the vendor sort of remove that from the contract and we have a fresh document let's let's you can't always do that here's what you can't do if we're Contracting I send you the final contract you then scratch it out sign it and put it in your file that you can't do if you scratch it out and send it back to me and say with a written because you need to protect yourself here with a written cover letter that says here is the edited contract with my pen and ink scratch outs please initial in them initial them and send them back even if they don't come back you've got yourself a piece of evidence that you can use later so what that is what's happening is you have not actually accepted the contract you've made a counter offer that's right and then they need to accept it and the performance of the contract if they just go ahead and do it probably would be considered acceptance so it it's ideal if you have their signed initial but it's not strictly necessary this what Charles was talking about too about um attaching his terms and conditions and sending it back it's really the same thing you're talking about it's not scratched out but it's okay here's our stuff that's a counter offer and what's probably happening is we're now engaged in What's called the battle of the forms and a court will figure out whose form actually prevails but it's another way of of trying to get your terms in there without a lot of unnecessary angst publish your terms and conditions if you have them on your website and refer your vendors to your website if you do bids attach your terms and conditions to the bid documents and then do not negotiate them if somebody bids on a on a process that has your terms and conditions attached to them then everybody's bidding on a Level Playing Field and I used to have this phenomenon you know they would they would get the bid and then they say now we need to talk about your terms stop next vendor we're not talking about anything you bid on it the way you got it if you don't want it get out of the way the next person does okay anybody anybody else isn't this wonderful stuff they're all awake yeah they arew that's good going back there but I get a lot is um signed you know these contracts and um then you know they turn them in and at that point you know with $110,000 you know it says in there we should produce insurance we should do you know all these things it doesn't seem like our ogc cares that this goes on um but I'm not comfortable you know signing underneath it because I'm the signature the facty person who signed it you know isn't is one question are you a a public or a private institution private so um the what what Charles was talking about about a parent Authority is the issue the Prof might have to the outside world the appearance of being able to sign a contract if you've done nothing to um disabuse the world of that notion so that may already be a binding contract even if the Prof had zero authority to sign it you can deal with that internally with the Prof but is with respect to the vendor it may be a legitimate contract if you're to public however um you may be able to say depending on your State's law that there is no apparent Authority against the state and when I was at Ohio State I used to do this all the time someone come up say well you know um your your coach signed a shoe contract you can't do whatever and I would say I really don't care if you want to sue the coach feel free I knew they weren't going to do that um but we're doing this well that violates the contract there is no contract there is no apparent Authority against the state there are two people at the Ohio State University who have the authority to sign contracts and if you don't know who they are that's your problem not mine you don't have that Advantage though so um there's a very good chance if you haven't taken affirmative steps to disabuse the world of who has Authority that that's a real contract but I want but you you you let's start changing the culture first you put on your website who does have authority on your campus let's start there secondly send a notice out to everybody that you're not signing these things anymore if they don't comply with some checklist that's that's that's me that's controlled centrally you're not putting your signature on them um I have been I share this with you it took me a bit to do this I have been designated the signing Authority for all hiring and all acquisitions for export control purposes now here's the truth of the matter I don't know anything about the technology involved in this but I sent the word out when you send me something where you're going to hire a foreign graduate an international graduate student or you're going to buy a new piece of equipment that's on some government list you need to justify it or I don't sign it if I don't sign it you don't get it it took a month but it's now routine it's going to take you a little longer than that but one one last Quick point on that and then we're at our time um you said your your general council's office didn't seem concerned they probably are concerned but they're concerned not only about the liab they're also concerned that if they if they have to see every single contract they'll just commit suicide um because your campus is probably ENT entering into a 100 contracts a day and for the reasons we talked about most of what's in them has nothing to do with legal stuff the lawyer can't be going around figuring out what the business deal is the real solution um from my perspective is to have a legal office and a Purchasing Office and the Purchasing Office people know what to do they're the professionals at buying and they're the ones who can help sort through that stuff and then they go to the lawyer with whatever the legal questions are um but that they would probably have signature Authority for the vast bulk of the you know mid-range contracts that's correct one more a large university university there are you know pockets of of contracts educ but one of the things that our general coun does which helps us as far as academic contracts of any sort if a contract actually makes its way to that office and it has not come from the Provost office from myself or from someone else provos another associate um it gets sent back to the person with a note that says we need to know that the proos office first of all is approving of of of this proposal and that's the office you have to work through first before it comes up to our so they're really good about well that's the internal routing procedure that we both suggested you want to have an internal process that you adhere to religiously all right and we'll both be outside if anyone wants to talk to us later thank you all you've been great

Channel: UVM Professional and Continuing Ed

Views: 169,871

Keywords: Contract Basics, Educational, Legal Issues, University of Vermont, UVM, UVM higher education conference, UVM legal conference, legal conference, higher ed legal conference, higher education legal conference

Id: 2Mqn_RxRj84

Length: 78min 40sec (4720 seconds)

Published: Wed Oct 24 2012