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    ContractReviewChecklist.doc ContractReviewChecklist.doc Document Transcript

    • Contract Review Checklist and Contract Advisory Form CONTRACT CHECKLIST Applicability: The contract checklist applies to contracts for the purchase of goods or services and for agreements under which goods or services are donated to the University. Parts of the checklist also apply to agreements under which the University provides goods or services to another party, and to non-disclosure/confidentiality agreements. The checklist has not been designed to apply to sponsored program agreements, construction and design services contracts, real property transactions, or University employment contracts (other than independent contractors). Who should use the checklist: The contract checklist was developed primarily for use by the Contract Management section of the Purchasing Department as a review tool to aid in protecting the University's interests in contractual matters. The Checklist is not all- inclusive, but it covers many of the basics of sound contracting. It is suggested that the individual University departments take advantage of this tool to review their contracts prior to sending them to Contract Management. for approval and signing. However, it is not necessary for the University departments to complete and fulfill the Checklist to physically accompany the contracts that they send to Contract Management." How to deal with a conflict between the checklist and your contract: If a contract does not satisfy all elements of the checklist, there are three options. First, the NC State University Purchasing office may negotiate with the vendor or other party to achieve mutually acceptable terms. Second, the NC State employee with an interest in the contract, and his or her supervisor, may sign a "Contract Advisory" that allows deviation from some of the checklist requirements. (See attachment.) Third, the University may decide not to enter into the contract. The decision about which options to pursue will be made by Purchasing in consultation with the University party in interest and, when needed, in consultation with Legal Affairs. The checklist may be edited from time-to-time. CHECKLIST 1. Does the contract seek to limit the other party's liability? Yes (Modify the contract or use Contract Advisory.) Yes, but the contract is for user-installed software. (Vendor may limit remedy for defective software to either replacement of the software or refund of the purchase/license price, at University's option. Otherwise, modify the contract or use Contract Advisory. "Software" does not include information content such as may be found on CD-ROMs and on-line databases.) No
    • 2. Does the contract subject the University to tort liability beyond the limits of the Tort Claims Act ($1,000,000 cap for negligence of state employee/agent acting within scope of employment -- see Legal Affairs Tort Page), or otherwise waive State's sovereign immunity? CAUTION: any clause that provides for University liability or "assumption of risk" or "responsibility" for damages, accidents, claims, etc. may violate this prohibition. Yes (Contract must be modified. Contract Advisory is not an option.) No 3. Does the contract provide for the University to "hold harmless," or "save harmless," or "indemnify" the contractor, or otherwise assume responsibility for paying the contractor's liabilities? Yes (Modify the contract. Contract Advisory is not an option.) No 4. Does the contract contain an acceleration clause or provision that all payments are immediately due upon breach of the contract or default? Yes (Modify the contract or use Contract Advisory.) No 5. Does the contract contain late payment penalties or finance charges? Yes (Modify the contract or use Contract Advisory.) No 6. Does the contract contain clauses that would make it subject to either the substantive law or the jurisdiction (also referred to as "forum" or "venue") of another state? Yes (Modify the contract. Contract Advisory is not an option.) No 7. Does the contract alter the incidences of North Carolina general law of contract by including clauses that: -- provide less than three years for the University to file a legal claim or sue for breach of contract
    • Yes (Modify the contract or use Contract Advisory.) No -- state that breach would cause irreparable harm and justify injunctive action? Yes (Modify the contract or use Contract Advisory.) No -- provide for liquidated damages or cancellation fees? Yes (Modify the contract or use Contract Advisory.) No 8. Does the contract require binding arbitration or any mandatory dispute resolution other than legal action in North Carolina courts? Yes (Modify the contract. Contract Advisory is not an option.) No 9. Does the contract allow the other party to assign its right to payment to a third party without subjecting the third party to all the defenses and claims the University would have against the contractor? Yes (Modify the contract. Contract Advisory is not an option.) No 10. Does the contract contains confidentiality or non-disclosure provisions? Yes (Add clause to make it subject to the NC Public Records Act.) No 11. Are payment terms NET 30 (meaning that payment is due 30 days later) upon receipt and approval of invoice? Yes No (Modify unless Purchasing allows otherwise.)
    • 12. Does the contract provide for the University to pay attorney fees, court costs, or other litigation expenses of other parties if there is a dispute? Yes (Modify the contract. Contract Advisory is not an option.) No 13. Does the contract provide for automatic renewal, or renewal unless the University takes affirmative action to terminate? Yes (Modify unless Purchasing allows otherwise.) No 14. Does the contract provide for personal liability of the signer or any other University employee? Yes (Modify the contract. Contract Advisory is not an option.) No 15. Does the contract result in the University directly or indirectly making money in competition with private business? Yes (Consult with Legal.) No 16. Does the contract incorporate other terms or documents or information by reference, or refer to information outside the contract? Yes (Attach the referenced terms or outside information. Review them against this Checklist. If they are unavailable, delete the reference to them.) No 17. Does the contract create rights in parties other than the University and contractor? Yes (Consult with Legal.) No 18. Does the contract allow the vendor to repossess property or take action outside of court proceedings in response to a University breach of contract? Yes (Modify the contract or use Contract Advisory.)
    • No 19. Does the contract provide the other party with ownership or other rights (often called a "security interest" or "UCC statement") in the property being purchased by the University? Yes (Modify the contract or use Contract Advisory.) No 20. Does the contract provide for payments beyond the current fiscal year? Yes (Add a statement that payments beyond the current fiscal year are conditioned on appropriation of sufficient funds to cover the purposes set forth in the agreement.) No 21. If the contract is for personal services (consulting, artistic performance, etc.), has the Finance and Business Vice Chancellor's checklist for independent contractor status been completed and attached? Yes No (Return to campus originator for checklist completion.) 22. Does the contract allow the price or other terms to be changed in the future? Yes (Future price changes should not exceed the Consumer Price Index; all other changes must be accepted in writing by Purchasing before they become effective.) No 23. Does the contract allow the other party to use the University's name in any advertising, endorsement, or promotion? Yes (Modify the contract to state the University's name may NOT be used in any advertising, endorsement, or promotion) No 24. Does the contract allow the other party to terminate the contract? Yes (Modify the contract so that NC State gets a pro rata refund.) No
    • 25. Does the contract require the University to obtain insurance or a bond? Yes (Modify the contract to state that "NC State is self-insuring." Check with the University office of Insurance and Risk Management to be sure since NC State does purchase insurance for a few areas.) No 26. Does the contract require the University to "ensure" or use "best efforts" or otherwise guarantee anything (e.g., security of property or confidentiality of information)? Yes (Replace that requirement with wording that NC State will use "reasonable efforts".) No 27. Is there any part of the contract that the campus originator does not understand? Yes (Indicate what part and discuss with Purchasing.) No 28. Other: Purchasing will review the contract to determine compliance with rules of the State Division of Purchase and Contract; for consulting services, whether the contractor is an "administrative consultant" or an "academic consultant"; and whether proper bid procedures have been followed. For each contract reviewed under this Checklist, please complete the following information. Name and title of contract reviewer in the NC State Purchasing office:___________________________________________________ Date of Checklist review: ______________________________ Name of contractor (other party): __________________________________________________ Name and department of University originator: ________________________________________ Description of product or services in the contract: _______________________________________________________
    • _______________________________________________________ Was a Contract Advisory used? _______ Yes ______ No