UNC Charlotte Contract Checklist

UPDATED February 29, 2012

This checklist may be edited from time to time. A printable version is avalable here.

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 Legal Affairs to assist Materials Management 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 Materials Management 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).
Contracts for Goods or Services: Special note on purchasing goods or services (including independent contractor agreements): 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, complete the form below , and always discuss any contract to obtain goods or services with the Office of Materials Management (ext. 7-7330) before engaging in extensive negotiation of other contract details.
Contracts Exceeding One Million Dollars ($1,000,000): EFFECTIVE OCTOBER 1, 2010: All proposed statewide and agency term contracts for supplies, materials, printing, equipment, and contractual services that exceed one million dollars ($1,000,000) MUST be reviewed by the UNC Charlotte General Counsel (ext. 7-5732) or designee to ensure that the proposed contracts are in proper legal form, contain all clauses required by law, are legally enforceable, and accomplish the intended purposes of the proposed contract. (NCGS § 114-8.3)
Procedures: See Contract Checklist Purpose and Procedures.
Conclusion: If a contract does not satisfy all elements of the checklist, there are three options:
- 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.
- 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.
- 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 Materials Management and, when needed, in consultation with the Office of Legal Affairs.

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, 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.

NAME OF OTHER PARTY(IES):___________________________________________

DESCRIPTION OF PRODUCT/SERVICES IN THE CONTRACT: ________________________________________________________________________________________________________________________________

IMPORTANT NOTE PRIOR TO BEGINNING CONTRACT REVIEW:

IF THE CONTRACT IS FOR PURCHASE OF GOODS OR SERVICES OR CONSULTING (INDEPENDENT CONTRACTOR AGREEMENT),

1. Review UNC Charlotte PURCHASING MANUAL/PROCEDURES and consult with Materials Management (ext. 7330) to determine:

(a) whether rules of the State Division of Purchase and Contract have been complied with; (c) whether proper bid procedures have been followed.

2. Ensure that the following language is inserted into all contracts for the purchase of goods or services:

"Access to Persons and Records: The State Auditor and the University of North Carolina at Charlotte's internal auditors will be given access to persons and records that are generated as a result of, or are related to, this Agreement for purposes of verifying accounts and data affecting fees or performance."

_____ Materials Management approved each item listed above:

__________________________________________ ________________
(Name of Materials Management rep 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 Legal Affairs.)

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. The University cannot protect an employee from personal liability; the Defense of State Employees Act applies only to liabilities within the course and scope of an employee's State employment.)
___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 Unversity Policy 603.2.)

___ No

NOTE: Prior written approval from the UNC Charlotte Materials Management 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.

10. 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

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

1. 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 online 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

2. 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

3. 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

4. Does the Contract alter the normal application of North Carolina general law of contract by including clauses that:

Violate the statute of limitations by providingless 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 Legal Affairs 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 Legal Affairs 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 Legal Affairs 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

5. 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

6. 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

1. 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.)

2. 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.)

3. 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.)

4. 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.)

5. Does the person who will execute the Contract for UNC Charlotte have legal authority to do so? (See Policy Statement #603.1 and UNC Charlotte contractual authority list or contact the Office of Legal Affairs.)

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

6. 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.)

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

___Yes
___No (Determine dates and include.)

8. 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.)

9. 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.)

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

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

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

___Yes
___No (If applicable, obtain acceptable invoice.)

___ N/A

12. 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 Materials Management allows otherwise.)

13. 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

14. 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.)

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

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

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

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

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

___Yes (Consult with Office of Legal Affairs.)
___No

18. 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

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

___Yes (Consult with the Office of Legal Affairs.)
___No

20. 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 Legal Affairs to check for conflicts. The Office of Legal Affairs maintains a database of all exclusive contracts binding the University.)
___No

21. 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 Materials Management.)
___No

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

Have you consulted with Materials Management (ext. 7330) to assure that IRS "independent contractor" rules are observed? (See above.)

___Yes

___No (Consult with Materials Management.)

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 Legal Affairs with any questions.)

___ No

Does the contract require that the University provide the Contractor with personal identifiers as listed in N.C.G.S. §132-1.10 and in N.C.G.S. §14-113.20(b) or any other legally confidential information including "personally identifiable information" from student education records as defined by the Family Educational Rights and Privacy Act (FERPA)?

___Yes (Add the clause suggested here. Contact the Office of Legal Affairs with any questions.)

___ No

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

___Yes (Obtain approval from Materials Management.)
___No

24. 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 University Advancement.)
___No

25. 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

26. 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 Risk Management in RMSS 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 Office of Legal Affairs office to obtain an insurance letter explaining the University’s coverage under the Tort Claims Act and the State’s excess liability insurance policy. Click here for an insurance letter template.)

___No

27. 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.)

28. If answer to Question III.27 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.)

29. 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

30. 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

31. 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

32. 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

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

___ Yes. Name of facility: _____________________________________

Name of individual giving approval of any fees and/or scheduling: __________________________________________________

____ No

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

___ Yes (Approval by the Vice Chancellor for Business Affairs is required.)

___ No

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

___Yes

___ No (Approval by the Vice Chancellor for Business Affairs is required.)

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

___Yes (Indicate what part and discuss with Materials Management.)
___No

37. 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.)

38. 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 Legal Affairs if you have any questions about intellectual property issues in a contract, including patent, copyright, or trademark/servicemark issues.)

___ No

39. 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

40. 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 originating Contract: ____________________________________ Date: ___________________

Signature of supervisor of person originating Contract: ___________________________________ Date: ___________________

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, 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.

UNC Charlotte Contract Advisory
Click here for separate printable form.

Updated February 29, 2012

RELATING TO CONTRACT BETWEEN UNC CHARLOTTE AND ____________________________

IF (A) YOU HAVE BEEN DELEGATED AUTHORITY, IN WRITING, TO SIGN THIS CONTRACT, AND (B) YOU HAVE ASSESSED THE RISKS INVOLVED IN AGREEING TO THE CONTRACT CLAUSES MARKED BELOW, AND (C) YOU CHOOSE TO APPLY THE CONTRACT ADVISORY PROCESS, THEN 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.

This Contract contains terms that would impose unusual and generally unacceptable liability on UNC Charlotte. The UNC Charlotte Office of Legal Affairs and the Attorney General of North Carolina strongly recommend that such terms be deleted. However, the decision whether to assume risks associated with such terms is left to the supervisor (department head or higher) of the person authorized to sign the Contract.

Therefore, if the decision to enter the Contract without deleting the terms that have been identified as contrary to State and/or University policy means that (a) any damages or costs that result from the presence of those terms must be paid from the budget for your unit, and (b) your unit is accepting the risk that such terms will prevent the university from collecting damages that might otherwise be available under general contract law principles.

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, damages or inability to collect damages that would otherwise be owed. I have initialed below the Contract Checklist items for which I am accepting those special risks:

• II.1 _____ Limits other party's liability
• II.2 _____ Acceleration clause
• II.3 _____ Late payment penalties
• II.4_____ Statute of Limitations or Injunctive relief or liquidated damages
• II.5_____ Repossess property or action outside court proceedings
• II.6_____ Grant ownership rights

Authorized contract signatory signature: ________________________________ Date: ___________

Authorized contract signatory printed name: ________________________________

Supervisor's signature: ________________________________ Date: ___________

Supervisor's printed name: ________________________________

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