UNC Charlotte Contract Checklist

CONTRACT CHECKLIST
UPDATED August 30, 2007

To complete the Contract Checklist, print out this document and fill it in by hand.

This checklist has been prepared by the UNC Charlotte Office of the General Counsel to assist Purchasing officers and other University employees in the negotiation and review of contracts. It is based on contracting guidelines from the NC Attorney General's office, on the rules of the State's and the University's Purchasing divisions, and on University policies.

Applicability: This checklist applies to contracts for the purchase of goods or services and for agreements under which goods or services (but not real estate) 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).

Special note on purchasing personal services or consultants: Contracts to obtain the services of consultants are closely regulated by State law. Most such contracts require the advance approval of the Governor or his delegate; however, contracts for certain institutional services, for curriculum development, and for academically oriented research are exempt from the prescribed procedures. Because each consulting or personal services contract you consider will involve different facts and circumstances, ALWAYS discuss any contract to obtain consultant services with the Office of Purchasing (ext. 2227) BEFORE engaging in extensive negotiation of other contract details.

Procedures: See Contract Checklist Purpose and Procedures.

If a Contract does not satisfy all elements of the checklist, there are three options:

(1) The UNC Charlotte person with an interest in the Contract may negotiate with the vendor or other party to reach agreement on terms that are consistent with the Checklist guidelines.

(2) The UNC Charlotte 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.

(3) The University may decide not to enter into the Contract. The decision about which options to pursue will be made by the person with an interest in the Contract after consultation with Purchasing and, when needed, in consultation with the Office of the General Counsel.

NOTE: Reviewer is responsible to assure that at least one original of the contract, signed by all parties, is obtained and filed with the Office of Sponsored Programs (421 Reese Building), and that a copy of the fully executed contract is kept on file in the office of the Authorized Person signing the contract on behalf of UNC Charlotte. This completed checklist, appropriately signed, must be filed with the original contract.

This checklist may be edited from time to time. The most recent version may be found on the Office of the General Counsel's web site at http://www.legal.uncc.edu/contract.html.

NAME OF OTHER PARTY(IES):___________________________________________

DESCRIPTION OF PRODUCT/SERVICES IN THE CONTRACT: ________________________________________________________________________________________________________________________________

CONTRACT CHECKLIST

IMPORTANT NOTE PRIOR TO BEGINNING CONTRACT REVIEW:
IF THE CONTRACT IS FOR PURCHASE OF GOODS OR SERVICES, REVIEW UNC CHARLOTTE PURCHASING MANUAL AND CONSULT WITH PURCHASING (ext. 2227) TO DETERMINE:

(a) whether rules of the State Division of Purchase and Contract have been complied with;
(b) whether independent contractors hired for consulting are "administrative consultants" or "academic consultants"; and
(c) whether proper bid procedures have been followed.

_____ Purchasing approved each item listed above:

____________________________________________ ________________
(Name of Purchasing Office representative who approved) (Date of approval)

I. IF THE FOLLOWING TERMS ARE IN THE CONTRACT, CONTRACT MUST BE MODIFIED OR ABANDONED; CONTRACT ADVISORY IS NOT AN OPTION. THESE CLAUSES ARE PROHIBITED!

1. 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), or otherwise waive State's sovereign immunity? (For further information, contact the Office of the General Counsel.)

CAUTION: any clause that provides for University liability or "assumption of risk" or "responsibility" for damages, accidents, claims, etc. may violate this prohibition.

___Yes (Either modify the Contract or abandon it. Contract Advisory is not an option. Click here for an explanation of why this clause is prohibited.) Click here for language to use in negotiating the removal of this clause from the Contract.
___No

2. 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?

3. Does the Contract contain clauses that would make it subject to either the substantive law or the jurisdiction (also referred to "forum" or "venue") of another state?

4. Does the Contract require binding arbitration or any mandatory dispute resolution other than legal action in North Carolina courts? (A mediation clause is acceptable.)

5. 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 original contracting party?

6. 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 (Either remove the clause or abandon the Contract. Contract Advisory is not an option. Click here for an explanation of why this clause is prohibited.) Click here for language to use in negotiating the removal of this clause from the Contract.
___No

7. Does the Contract provide for personal liability of the signer or any other University employee?

___Yes (Either remove the clause or abandon Contract. Contract Advisory is not an option.)
___No

8. Does the Contract include a “non-compete” clause, which requires, for instance, that the University may not contract with a similar service or product provider for a specified length of time after the expiration or termination of the Contract?

___Yes (Either remove the clause or abandon Contract. Contract Advisory is not an option. Click here for an explanation of why this clause is prohibited and for language to use in negotiating the removal of this clause from the Contract.)
___No

9. Does the Contract create a procurement relationship with the immediate family member of any employee of the University?

___ Yes (Either remove the clause or abandon Contract. Contract Advisory is not an option. See Policy Statement #41.)

___ No

NOTE: Prior written approval from the UNC Charlotte Purchasing Office and the North Carolina State Purchasing Office (SPO) is necessary before making University purchases from or through individuals who are also employees of the University or the State of North Carolina.

II. IF THE FOLLOWING TERMS ARE IN THE CONTRACT, EITHER MODIFY THE CONTRACT OR USE CONTRACT ADVISORY; OTHERWISE ABANDON IT.

10. Does the Contract seek to limit the other party's liability?

___Yes (Either remove the clause or use Contract Advisory; otherwise abandon the Contract. Click here for an explanation of why this clause is prohibited.) Click here for language to use in negotiating the removal of this clause from the Contract.

___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.)

___ Yes, but the Contract is for sale and purchase of information processing equipment, supplies, services, or licensing of software from IBM. (Remove the clause. IBM has agreed to unlimited liability to the State for personal injury or property damage claims.)
___No

11. Does the Contract contain a provision that all payments are immediately due upon breach of the contract or default (also known as an "acceleration clause")?

___Yes (Either remove the clause or use Contract Advisory; otherwise abandon the Contract.) Click here for language to use in negotiating the removal of this clause from the Contract.
___No

12. Does the Contract contain information about late payment penalties or finance charges?

___Yes (Either remove the clause or use Contract Advisory; otherwise abandon the Contract.)
___No

13. Does the Contract alter the normal application 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 (Either remove the clause or contact the Office of the General Counsel if you use Contract Advisory; otherwise abandon the Contract.)

Click here for language to use in negotiating the removal of this clause from the Contract.
___No

State that breach would cause irreparable harm and justify injunctive action?

___Yes (Either remove the clause or contact the Office of the General Counsel if you use Contract Advisory; otherwise abandon the Contract.)

Click here for language to use in negotiating the removal of this clause from the Contract.

___No

Provide for liquidated damages or cancellation fees?

___Yes (Either remove the clause or contact the Office of the General Counsel if you use Contract Advisory; otherwise abandon the Contract.)

Click here for language to use in negotiating the removal of this clause from the Contract.
___No

14. 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 (Either remove the clause or use Contract Advisory; otherwise abandon the Contract.)
___No

15. 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 (Either remove the clause or use Contract Advisory; otherwise abandon the Contract.)
___No

III. OTHER IMPORTANT CONSIDERATIONS THAT MAY REQUIRE CONTRACT MODIFICATION, CONSULTATION, OR FURTHER DOCUMENTATION OR AUTHORIZATION

16. Is the reviewer the person most knowledgeable about the background and facts?

___Yes
___No. (Discuss the Contract with the person most knowledgeable and proceed with Contract Review form.)

17. Is Contract document complete? Are all attachments or documents referenced in the Contract attached?

___Yes
___No (If no STOP REVIEW until all documents are obtained and attached.)

18. Is the name and authority of the other party's representative provided? Are they identified by a corporate or individual name? If corporate, is their state of incorporation included? Are abbreviations used and are they consistent throughout the document and in the signature blocks?

___Yes (Insure signature lines match name and authority exactly.)
___No (STOP REVIEW, obtain and attach evidence of authority.)

19. Does the Contract clearly establish who will execute the Contract for the other party, and in what capacity? Are the names, addresses, telephone, and fax numbers of each party's point of contact included?

___Yes
___No (STOP REVIEW, obtain and then continue with review.)

20. Does the person who will execute the Contract for UNC Charlotte have legal authority to do so? (See Policy Statement #35 and UNC Charlotte contractual authority list or contact the Office of the General Counsel.)

___Yes (Insure signature lines match name and authority.)
___No (Change name/title to that of a person who has authority to sign.)

21. Does Contract contain a clause setting forth that the Contract is the complete agreement of the parties? Does the Contract clearly and accurately state the "consideration." (Note: "Consideration" is a legal term meaning the cause, motive, price or compelling influence which induces a contracting party to enter into a contract. Any benefit conferred or agreed to be conferred to which a party is already legally entitled does not constitute consideration for a contract.)

___Yes
___No (Insure parties do not have any oral or "side" agreements and then include clause, if applicable.)

22. Does Contract have a clearly stated beginning date, ending date and effective date?

___Yes
___No (Determine dates and include.)

23. Does Contract contain a provision stating that time is of the essence in performance of this Contract by the other parties?

___Yes
___No (Insure parties do not have any oral or "side" agreements and then include clause.)

24. Is there a provision for notification of default, a method to cure such default and specific steps provided for notice to parties?

___Yes
___No (If no notice or method for cure is included, review purpose of Contract. If no specific steps are included for notice to parties, include a provision.)

25. Does the Contract clearly establish time, place, and method of payment?

___Yes
___No (Include a clause establishing time, place, and method of payment.)

26. If applicable, does the contract meet the Business Vice Chancellor's requirements for acceptable invoices?

___Yes
___No (If applicable, obtain acceptable invoice.)

___ N/A

27. Are payment terms at least NET 45 upon receipt and approval of invoice (meaning that the University has up to 45 days to pay in full)?

___Yes
___No (Modify to reflect NET 45 terms unless Purchasing allows otherwise.)

28. If the Contract is for personal services by an out-of-state person or entity in the form of a performance, an entertainment or athletic event, a speech (including an academic lecture), or the creation of a film, radio, or television program, does the Contract provide that the University shall withhold a 4% nonresident income tax on payments greater than $1,500 in any one calendar year?

___ Yes

___ No (Include withholding clause.)

___ N/A

29. Does Contract contain a force majeure clause ("act of God clause") effective as to both parties?

___Yes (Is clause consistent with the Contract purpose?)
___No (Determine how acts of God are likely to impact the Contract, negotiate and insert clause, if applicable.)

30. Does the Contract contain confidentiality or non-disclosure provisions?

___Yes (Add clause to make it subject to the NC Public Records Act.)
___No

31. Does the Contract provide for automatic renewal, or renewal unless the University takes affirmative action to terminate?

___Yes (Remove automatic renewal term unless Purchasing allows otherwise.)
___No

32. Does the Contract result in the University directly or indirectly making money in competition with private business?

___Yes (Consult with Office of the General Counsel.)
___No

33. Does the Contract assume or refer to information or documents outside those included with the Contract?

___Yes (Determine if such information is needed for proper Contract interpretation, review them against the checklist and include if required.)
___No

34. Does the Contract create rights in parties other than the University and contractor?

___Yes (Consult with the Office of the General Counsel.)
___No

35. Does the Contract grant any party other than the University any "exclusive right," so that the contract would limit for a period of time the University's capacity to grant similar rights to other persons or organizations?

___Yes (Consult with the Office of the General Counsel to check for conflicts. The Office of the General Counsel maintains a database of all exclusive contracts binding the University.)
___No

36. Does the Contract provide for payments beyond the current fiscal year?

___Yes, from State appropriated funds. (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.)
___Yes, from other than State-appropriated funds. (Obtain approval from Purchasing.)
___No

37. If the Contract is for consulting or other personal services (artistic performance, etc.):

Have you consulted with Purchasing (ext. 2227) to assure that IRS "independent contractor" rules are observed? (See above.)

___Yes

___No (Consult with Purchasing.)

Does the Contract involve the creation or modification of any intellectual property (copyright, patent, trademark) by the party providing consulting or other personal services?

___ Yes (Ensure that the Contract provides that any such intellectual property rights are owned entirely by the University (e.g., "University shall retain all right, title, and interest, including copyright in the work..."). Contact the Office of the General Counsel with any questions.)

___ No

38. Does the Contract include a clause or covenant providing that the University will not hire a service provider's employees who work with us in the provision of services?

___ Yes (Delete the clause. Contract Advisory is not an option. Click here for an explanation of why this clause is prohibited.)

___ No

39. Does the Contract allow the price or other terms to be changed in the future?

___Yes (Obtain approval from Purchasing.)
___No

40. Does the Contract allow the other party to use the University's name in any advertising, endorsement, or promotion?

___Yes (Modify the Contract to require advance written approval of content from the Vice Chancellor for Development and University Relations.)
___No

41. Does the Contract allow the other party to terminate the Contract?

___Yes (Modify the Contract so that UNC Charlotte gets a pro rata refund.)
___No

42. Does the Contract require the University to obtain insurance or a bond?

___Yes (Modify the Contract to state that "UNC Charlotte is self-insuring." Check with the Office of Meal Plans, 49er Card and Insurance (ext. 2139) to be sure since UNC Charlotte does purchase insurance for a few areas.)

___ Yes, and the Contract requires that the University provide proof of insurance (Contact the University Attorney’s office to obtain an insurance letter explaining the University’s coverage under the Tort Claims Act and the State’s excess liability insurance policy.)
___No

43. Does the Contract provide for other party to buy an insurance policy protecting UNC Charlotte?

___Yes. Does the Contract provide for proof of insurance from other party within ten (10) working days of Contract execution?

___ Yes

___ No (Modify the Contract to include provision for proof of insurance within time frame.)

___No (For proof of insurance, modify the Contract to include provision for proof of insurance within time frame.)

44. If answer to Question 43 was yes, does the Contract provide for default if insurance is not maintained by other party?

___Yes
___No (Review Contract purpose and determine if it should be included.)

45. Does the other party assert a right to exclusive control of any investigation, defense or settlement of any patent or copyright lawsuit or other claim filed against UNC Charlotte?

___Yes (Such provision must be deleted or conformed to the representation requirement established by law.)
___No

46. Does the Contract require the University to "ensure," use "best efforts," "warrant," or otherwise guarantee anything (e.g., security of property or confidentiality of information)?

___Yes (Replace that requirement with wording that UNC Charlotte will use "reasonable efforts.")
___No

47. Does the contract involve the purchase or use of any computer software, hardware, or any other equipment that performs any date and/or time data recognition function, calculation, or sequencing?

___ Yes (Include required Year 2000 Compliance Language)

___ No

48. Does the contract require personnel, space, or equipment in addition to what is presently available for the project, or does it require alterations to physical plant, installation, or maintenance of equipment?

___ Yes

a. You are required to obtain approval from the Vice Chancellor for Business Affairs (or designee) that such requirements can be provided within the limits of funds available.

b. If the contract requires the purchase of equipment, you are required to determine that such equipment is not already available for the project.

___ No

49. Is the contract with a service organization to process transactions for the University that have a significant impact on University financial statements (e.g., investment managers, custodial banks, trustee banks)?

___ Yes. The service organization is required to have an annual SAS 70 audit of its internal controls. Modify the contract to include language requiring such audit.

___ No

50. Does the contract involve the use of one or more University facilities that require scheduling, user fees, or both?

___ Yes. Name of facility: _____________________________________

e:10.0pt'>Name of individual giving approval of any fees and/or scheduling: __________________________________________________

____ No

51. Does the contract create competition with other areas of campus?

___ Yes (Approval by the Provost (or designee) is required.)

___ No

52. Does the contract fall within the greater mission of the University?

___Yes

___ No (Approval by the Provost (or designee) is required.)

53. Is there any part of the Contract that the campus originator does not understand?

___Yes (Indicate what part and discuss with Purchasing.)
___No

54. Should the Contract be signed in multiple originals or counterparts?

___Yes (Insure correct number of "originals" exist.)
___No (Consider how many parties will "prove" the Contract if needed.)

55. Does the Contract include a provision in which one party assigns copyright in certain intellectual property to the other party?

___ Yes (Make sure that the language explicitly states that the assigning party assigns "all right, title, and interest, including copyright" in the property described. Contact the Office of the General Counsel if you have any questions about intellectual property issues in a contract, including patent, copyright, or trademark/servicemark issues.)

___ No

56. Does the contract involve the disclosure or maintenance of any personally identifiable patient information, including records of medical treatment or billing for medical treatment?

___ Yes. Make sure the language of the contract explicitly provides as follows:

“All parties to this Agreement shall abide by all laws and regulations governing the confidentiality of patient information and shall vigorously safeguard privileged information. Any personally identifiable medical record information, personnel information, or other information that is exempt from the North Carolina Public Records Act, or is otherwise protected by law from disclosure, that is provided by the University to [the other party] under this Agreement shall be kept confidential and shall not be further disclosed without the prior written approval of the University.”

___ No

57. Was a Contract Advisory used?

___ Yes (must be attached)

___ No

I have reviewed the Contract and given accurate responses to each item listed above.

Signature of person completing this Checklist: _________________________________

Date of Review: ______________________

NOTE: Reviewer is responsible to assure that at least one original of the contract, signed by all parties, is obtained and filed with the Office of Sponsored Programs (421 Reese Building), and that a copy of the fully executed contract is kept on file in the office of the Authorized Person signing the contract on behalf of UNC Charlotte. This completed checklist, appropriately signed, must be filed with the original contract.

CONTRACT ADVISORY
Click here for separate printable form.

If the Chancellor has delegated to you the authority to sign this contract, and you have ASSESSED THE RISKS INVOLVED IN AGREEING TO CERTAIN CONTRACT CLAUSES AND choose TO APPLY THE CONTRACT ADVISORY PROCESS (IF AVAILABLE FOR THE PARTICULAR CONTRACT CHECKLIST ITEM), this Contract Advisory must be reviewed and signed by your supervisor before you sign the contract. Once signed, this Contract Advisory must be attached to the Contract Checklist when filed with the appropriate office.

The Contract you have submitted for approval and signature contains language that would impose unreasonable liability on the University. The UNC Charlotte Office of the General Counsel and the Attorney General for North Carolina strongly recommend that such terms be deleted. However, the decision whether to assume risks of contractor non-performance, default, defect, and other liabilities is left to the UNC Charlotte supervisor (department head or higher) of the person authorized to sign the contract for the product or service being provided under the Contract.

If you specify below that you desire to enter the Contract without deleting the provisions that have been identified as contrary to State and/or University policy, any damages or costs must be paid from the budget for your office.

I hereby accept provisions in the proposed Contract which require the approval of the appropriate Supervisor because they present risks that legal counsel has advised against accepting. I understand that my decision exposes my department to possible losses or damages. I have initialed below the Contract Checklist items for which I am accepting those special risks:

10_____ 11_____ 12_____ 13_____ 14_____ 15_____

Authorized contract signatory signature: ________________________________ Date: ___________

Authorized contract signatory printed name: ________________________________

Supervisor's signature: ________________________________ Date: ___________

Supervisor's printed name: ________________________________

[Top of Contract Checklist] [Office of the General Counsel] [UNC Charlotte]