CONTRACTS 101 FOR STATE UNIVERSITY PROCUREMENT OFFICERS

Presented by: Katherine A. Adams University of Kentucky Office of Legal Counsel 301 Main Building Lexington, KY

State universities are independent agencies of the Commonwealth of Kentucky. The governance structure begins with the authority granted to the Board of Trustees or the Board of Governors in the Kentucky Revised Statutes (KRS) Chapter 164. The Board is the final authority in all matters affecting the University, within limits of State Constitution, federal and state laws. The Board has jurisdiction over the University’s financial, educational, and other policies and its relations with state and federal Government. University Governance

The “LAW” of the University United States Constitution Federal Law Federal Regulation Kentucky Constitution Kentucky Revised Statutes (KRS) Kentucky Administrative Regulations (KAR) Governing Regulations (GR) Administrative Regulations (AR) Human Resources Policy and Procedure (HRP&P) Business Procedures Manual University Senate Rules (SR) Code of Student Conduct Hospital Policy (HP) Other University Policy and Procedure Local Ordinances

The “Law” of the University August 2007 COUNCIL ON POSTSECONDARY EDUCATION (CPE) KENTUCKY GENERAL ASSEMBLY KY Revised Statutes (KRS) and Administrative Regulations (KAR) BOARD PRESIDENT FEDERAL GOVERNMENT Federal Law ACCREDITING AGENCIES Research, Hospital, Etc. LOCAL ORDINANCE STAFF Human Resources Policy & Procedure, AR, GR STUDENTS Code of Student Conduct, Rules of the University Senate, AR, GR FACULTY Rules of the University Senate, AR, GR, HRP&P Business Procedures Manual Other, Other, Other

For all you do! Thank you!

Contracts and Signature Authority

Procurement Check your University Policy. At UK, all agreements and contracts involving procurement shall be requisitioned through the Purchasing Division and comply with KRS 45A.

What makes a contract? Offer and acceptance – in any form Letters Memoranda of Understanding Memoranda of Agreement On-line agreements – “click” and “no-click” Shrink-wrap license agreements Purchase orders Terms and conditions Contracts and Signature Authority

Problematic Contract Clauses Some contract clauses present particular legal or business issues for the University: Use of proper name Arbitration Indemnity Choice of law Term and Termination Insurance Right of First Refusal Conflict of Interest Confidentiality Clauses Copyright Clauses

Sometimes you just have to say no…

What’s In a Name? Prevent confusion Ensure proper contacts “Real Party” to the Agreement

Arbitration Who gets to decide? Judge or arbitrator? State agencies can’t change state law

Indemnity-What is it? I will be liable for anything Vendors SHOULD indemnify UK UK CANNOT indemnify Vendors Absent other contractual limitations, even if a Vendor doesn’t agree to indemnify us, UK could still sue vendor for most types of harm

Attorneys Fees A form of indemnification and not permitted.

But It’s My Money! Vendors seek new and creative ways to limit liability. Caps on total liability (THE MOST DANGEROUS!) Limits on indemnity Exclusion of special damages and Punitive Damages

Choice of Law State agencies governed by state law Silence is permissible Specify Kentucky law if possible

Term and Termination How long? What happens if things don’t work out? What happens if there is no money?

Insurance Cover appropriate risks

Right of First Refusal Right to match another offer Contrary to Model Procurement Code

Conflict of Interest State law University Regulations Code of Ethics

Confidentiality Clauses State law University goals

Copyright Clauses I paid for it and you’re telling me WHAT?? –Work for hire –Assignment –License

Open Records

Kentucky Open Records Act (KRS ) states: “The General Assembly finds and declares that the basic policy of KRS to is that free and open examination of public records is in the public interest and the exceptions provided for by KRS or otherwise provided by law shall be strictly construed, even though such examination may cause inconvenience or embarrassment to public officials or others.”KRS KRS Open Records If you receive an Open Records Request, please forward it to the office responsible for it immediately, as Kentucky law mandates a response within 3 days of receipt of the request.

Subpoenas Litigation ESSENTIALLY ALL Records Available!

Misc. and Questions New clauses seem to pop up! New laws seem to get added! Any questions?

“Run it by legal” “Don’t bother – it’s fine”