1. UNIVERSITY OF COLORADO CONTRACT TRAINING
Office of University Counsel
September 20, 2016

2. Goals Understand legal issues common to university contracts
Learn to identify common clauses of concern
Identify acceptable alternative approaches and learn to focus negotiations

3. Key Clauses Contracting Parties Recitals Definitions Statement of Work
Term
Payment & Billing Terms
Confidentiality
Publications
Indemnification/Liability
Governing Law
Reporting (technical, financial, other?)
Property
Insurance
Travel & Expenses
Intellectual Property
Termination
Warranties/Guarantees
Dispute Resolution
Severability
Contacts (Legal and Technical)\
Changes
Audit Rights
Notice
Assignment

4. Potentially Problematic Clauses
Statement of Work
Dispute Resolution
Governing Law
Indemnification
Injunctive Relief
Intellectual Property
Confidentiality and Non-Disclosure
Publications
Warranty and Guarantee
Hidden Danger

5. Common Legal Issues in University Contracts

6. Common Legal Issues Authority to contract/delegation
Constitutional limitations (debt & indemnity)
Proper allocation of risk
State law considerations
Arbitration….

7. Authority to Contract for CU

8. Authority to Contract
“There shall be nine regents of the university of Colorado who shall be elected in the manner prescribed by law [and] shall constitute a body corporate to be known by the name and style of ‘The Regents of the University of Colorado’.” - Colo. Const. art. IX, § 12
Power to contract is inherent in plenary supervisory power of the Regents.

9. Practice Tip
Proper Parties: “Regents of the University of Colorado, a body corporate, acting on behalf of the University of Colorado Boulder, a public institution of higher education created under the constitution and law of the State of Colorado.”

11. Authority to Contract
As an “arm” or “instrumentality” of the state, college and university contracts could be held to bind the state. Accordingly, rules and limitations are imposed by law.
It is the intent of the general assembly that fiscal rules promulgated by the controller shall be applicable to any institution of higher education

12. Authority to Contract Senate Bill 10-003 - State Fiscal Rule Exemption
“[T]he governing board of an institution of higher education that has adopted fiscal procedures and has determined that the fiscal procedures provide adequate safeguards for the proper expenditure of the moneys of the institution may elect to exempt the institution from the fiscal rules promulgated by the controller pursuant to this subsection (13), including any procedures or forms required by law to be promulgated by the controller and any review or approval required to be performed by the controller ” § , C.R.S.

14. Who may enter contracts?
No implied contracts with governmental entities.
No equitable estopple for ultra vires contracts (probably) . . .
University funds cannot be expended pursuant to a contract unless authorized by the “head” of the institution or a designee.
C.R.S (5)(a)
A contract executed in violation of state law or fiscal rule is void and the individual who caused the violation may be personally liable. Also, state may not ratify invalid obligations.
C.R.S (3)

15. Delegation of contract authority
Express delegation in policy or writing is a best practice.
Delegation implied by job description (e.g., chief executive officer of the campus?)
Some obligations may not be delegable – e.g., approval of a tenure contract
University of Colorado v. Silverman

16. Procurement Rules
All CU procurement authority is delegated to the University Associate Vice President/Chief Procurement Officer, who may further subdelegate such authority.
No employee of the University is empowered to incur any obligation or make any commitment on behalf of the University for the Procurement of Goods or Services, except as provided under these Rules.

17. State Constitutional Limitations

18. State Constitutional Limitations
Joint ventures with private corporations
Grants in aid to private corporations
Limitations on debt

19. Exceptions Legislative declaration of a “valid public purpose”
Courts havent met one they didn’t like
Regents have quasi-legislative authority

20. TABOR Adopted in 1992 to restrict the growth of government.
Prohibits multiple-fiscal year financial obligations or direct or indirect debt without prior voter approval

22. TABOR Loopholes
Fiscal Funding Provision: Financial obligations of the University payable after the current fiscal year are contingent upon funds for that purpose being appropriated, budgeted, and otherwise made available.
Funds are encumbered or contract is annually renewable

23. Indemnification Hold harmless Make whole
CU shall be responsible for liability incurred by contractor . . .

24. Indemnity – AG Analysis
To the extent that a broad indemnification clause that could obligate a state institution to pay moneys in amounts not known and not encumbered upon the occurrence of a contingency (breach, unforeseen suit against contractor, etc.), it is viewed as unconstitutional debt.

25. AG Letter to Aetna 2000
An indemnification provision “is impermissible under Colorado law if it is: (1) a contingent liability; (2) not merely incidental to the transaction; (3) without legislative authorization; and (4) seeks a waiver of the State’s governmental immunity.”

26. Indemnification 3.3.1 Indemnification Prohibited.
Unless specifically authorized by statute, the University shall not indemnify and/or hold harmless another Party against any liability incurred as a result of the acts or omissions of the University or its officers, employees or agents.

27. Exceptions – HB
The governing board of a state institution of higher education that is designated as an enterprise pursuant to section may contract to indemnify and hold harmless a contractor if the governing board determines that the contract serves a valid public purpose and any risks to the institution that may arise from entering into the contract are sufficiently limited and outweighed by the benefits of the contract. - § , C. R.S.

28. Damages and Limitation of Liability
Insurance
Immunity
Indemnity
Allocation Of
Risk

29. We’re not talking about the Colorado Constitution anymore

30. Regent Policy 13.G
The purpose of proposed Regent Policy 13.G is to delegate, within defined circumstances and limits, authority to enter contracts that contain indemnity obligations.

31. Indemnification
University Counsel must conduct a risk analysis and recommendation
Must be tracked and reported to the Regents
Will slow down the contract and may not be approved
Try everything else first

32. Governmental immunity
As an arm of the state, the University is immune from any suit in federal court.
However, by consenting to sue and be sued in federal court, a state entity may waive 11th Amendment immunity.
It is not clear that a governmental entity may waive CGIA immunity by contract. Nevertheless, “consent to be sued clauses” should be avoided.

33. Governmental immunity
The CGIA limits state liability for claims that lie or could lie in tort. However, the CGIA does not apply to general contract claims.
When a tort may be dismissed as a claim, a contract claim may survive. BUT, contract-related claims that could sound in tort may be barred:
e.g., negligent misrepresentation of material facts prior to the execution of an agreement

34. GOOD LANGUAGE
The University agrees to be responsible for the negligent acts and omissions of its officers, agents and employees.  Notwithstanding any other provision of this Agreement to the contrary, no term or condition of this Agreement shall be construed or interpreted as a waiver, express or implied, of any of the immunities, rights, benefits, or other protections provided the University under the provisions of the Colorado Governmental Immunity Act, C.R.S. §§ et seq., as amended (“Act”).  The Parties understand and agree that liability for claims for injuries to persons or property arising out of the negligence of the State of Colorado or the University and its officers, agents or employees is controlled and limited by the provisions of the Act.

35. Limitation of Liability
Parties to a contract may allocate risk through limitation of liability or exculpatory clauses.
There is no prohibition against a limitation of liability clause, so long as it does not limit liability for damages or claims arising out of bodily injury (including death) and damage to tangible property. Fiscal Procedure 2-2,1.
Vendor liability may be limited to “negligent acts/omissions” of employees.

36. Damages
Don’t agree to exclude consequential damages unless there is an exception for bodily injury/damage to tangible property.
Exceptions: (1) Contractor will not be physically present; (2) License, maintenance support for intellectual property.

37. Damages
Liquidated damages are not enforceable if they are not reasonably based on anticipated harm and difficulty of proof of loss–i.e., penalties.
Clauses limiting damages to the amount of contract payment are acceptable, but beware of exculpation.
Be sure of insurance.

38. Insurance

39. Insurance URM requirements of contractor Named insured
$1million general liability aggregate
Named insured
Waiver of immunity?
Policy prohibition?

40. Other constitutional and statutory constraints on state contracts

41. Binding Arbitration
Unconstitutional delegation of public power to politically unaccountable persons. City and County of Denver v. Denver Firefighters Local NO. 858, 663 P.2d 1032 (1983).
Grievance arbitration, where arbitrator only has authority to interpret an existing contract, has been upheld

42. Binding Arbitration
The University can agree to dispute resolution discussions
between representatives from each organization with actual authority to resolve a dispute; OR
Recommendation submitted to a court of competent jurisdiction.
Mediation is acceptable but include language that permits judicial recourse.

43. Amendment 54 No contracting w/vendors who make political contributions
Held unconstitutional in Dallman v. Ritter, 225 P.3d 610, 638 (Colo. 2010).

44. Amendment 41 Gift Ban - includes independent contractors
An independent contractor for purposes of the gift ban is a natural person who has entered a personal services contract as defined in section et seq., C.R.S.

45. Undocumented aliens.
A public entity may not contract with a natural person unless the contractor swears and affirms he or she is a citizen or otherwise lawfully present in the U.S. and produces an accepted form of identification.
C.R.S. §

46. Undocumented aliens
Contractors performing services for public entities must certify they will not employ illegal aliens to perform work on the contract, and that the contractor has or will confirm eligibility of newly hired employees.
Employees may be confirmed using the federal E-Verify program or an alternative state department of labor program, (contractor affirmation)
Does not apply to agreements relating to the offer/sale of securities, investment fund management services, sponsored projects, intergovernmental agreements, or information technology services.

47. Personal Services Contracts
Any personal services contract that creates an independent contractor relationship and implicates the state personnel system must be approved by University human resources.
There are numerous statutory exceptions and approval is delegable.

48. More limitations on personal services – performance measurements
SB NO LONGER requires public entities, including the University, to include performance measures and standards in any personal services contract exceeding $100,000.
See HB

49. GOVERNING LAW Whose Law Applies ?
Determines which laws apply when interpreting a contract
As an institution of the State of Colorado, the University of Colorado is prohibited from accepting the laws of another state.
If the a vendor absolutely refuses to negotiate on this, contact University Counsel.

50. JURISDICTION AND VENUE: LOCATION, LOCATION, LOCATION
Jurisdiction means the location (country, state, county) where the contract will be subject to judicial review. Venue means the location where disputes shall be resolved/the case will be filed.
A court system may have jurisdiction (authority) to take a case within a wide geographical area, but proper venue for the case may be one specific court within that jurisdiction.
Do not accept jurisdiction outside of Colorado or venue outside of the Boulder/Denver area without consulting University Counsel
Preference: Jurisdiction - State Courts of Colorado, Venue – Denver County Alternative: Leave the contract silent
The research is being performed within the State of Colorado by a public entity of the State of Colorado. OCG has no authority to agree to jurisdiction other than Colorado.

51. Payment Terms How and When Upon signature? (ideal)
Schedule (auto-pay, date certain, or by milestone)
Invoice (monthly?)
Payment should be due within 30 days

52. Intellectual Property
See TTO

53. Confidentiality/ Non-Disclosure
Non-Disclosure: An obligation not to reveal information.
Confidentiality: State of holding something in confidence, to be treated as private and not for publication or distribution.

54. Confidentiality/ Non-Disclosure
Review the definition of Confidential Information. The contract should set forth a very narrow and specific scope of CI. The provision should make clear that CU is permitted to disclose the existence and nature of the agreement
CU does not agree to Research Results being included with the definition of “Confidential Information.
The Agreement itself is subject to the Colorado Open Records Act.

55. Publicity/Trademarks
Organizations that fund research at the University are not entitled to use the University’s name for promotional or advertising purposes.
• No use of CU logo/mark, without prior written approval:
“There shall be no use of the other party’s name, logo or trademarks without prior written approval of the other party. “

56. Warranty
A typical commercial contract warrant: Seller warrants that goods delivered pursuant to this contract shall be new, free from defects in workmanship, materials, and design and to be in accordance with all the requirements of this contract. Seller further warrants that the performance of work and services shall conform to the highest professional standards. These warranties shall survive final acceptance and payment

57. Potentially Problematic Clauses
Statement of Work
Dispute Resolution
Governing Law
Indemnification
Injunctive Relief
Intellectual Property
Confidentiality and Non-Disclosure
Publications
Warranty and Guarantee