Basic Contract Elements
Contract Review Essential Questions, Considerations and Common Issues
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A University contract must be between the Board of Trustees of the University of Illinois on behalf of the appropriate college or department and another entity. For example:
The Board of Trustees of the University of Illinois on behalf of its College of _________, on the Springfield campus ("University") and ____________...
The other party should be identified by its legal corporate/partnership or individual name.
It is important that the subject matter of the agreement, whether related to the purchase of goods or services, use of a University facility by a third party, or international academic and research cooperation, is clear and unambiguous. The expectations of each party should be plain and specific. Make sure that the five W's and H (Who, What, When, Where, Why, and How) are explicit in the text of the agreement.
Every contract should have a defined term (start date and end date). In general, a University contract should not have a term of more than 10 years (this includes the initial term, plus any renewal periods allowed).
Does the agreement allow both parties to terminate for cause and for convenience? If not, is there a reason why it doesn't? Are the circumstances allowing termination clearly identified and applicable to both parties? If not, why not?
The agreement should require advance written notice of early termination, identify the contact person for each party to receive such notice, and their address. The agreement should provide for payment to the University for services performed by the University up to the date of termination on a pro rata basis and/or for non-refundable obligations incurred by the University in anticipation of providing services.
Does the contract list events or actions that constitute a material breach (or default)? These items should be clear and specific and the contract should also define the consequences to the defaulting party. You may also want to consider allowing an opportunity to cure a breach, giving the defaulting party a specified number of days to make it right.
Does the agreement include language requiring non-disclosure or a prohibition on releasing defined confidential information? These kinds of clauses can be problematic for the University, which is subject to the Illinois Freedom of Information Act (FOIA). The University often negotiates to strike confidentiality provisions, or at a minimum to allow for disclosure by the University as required by law.
As a state entity, the University is limited in its ability to indemnify or hold others harmless. This kind of language in contracts is often problematic and requires negotiation with the other party. The Office of University Counsel's website provides additional information about contractual liability and indemnity.
Requests from contracting parties for proof of University insurance coverage are processed through the University Office of Risk Management. A certificate of insurance can be requested through the University Office of Risk Management website.
For facility use agreements where an external party is accessing University premises, the user (or tenant) may be required to provide evidence of liability protection to the University. The user may have access to this through their local insurance broker; or, the University offers access to a Tenants and Users Liability Insurance Policy (TULIP) issued through two different vendors, Marsh and Arthur J. Gallagher. More information about the TULIP programs can be found on the University Office of Risk Management website.
As a rule, the University always strikes arbitration language. Accepting binding arbitration puts the University at risk because we lose the liability cap provided by the Court of Claims (see Venue/Jurisdiction).
The contract should specify an application of Illinois law. The University's standard, preferred language is:
This contract shall be interpreted by application of Illinois law without regard to its conflicts provisions.
Under Illinois law, a contract claim against the University must be brought in the Illinois Court of Claims, which provides us with a cap on liability. The standard, preferred language is:
Any claims against University must be filed in accordance with the Illinois Court of Claims Act. This contract is non-exclusive.
There are certain clauses that the University is required by law to include in its contracts. While there are several such clauses required for procurement contracts, there are only two that frequently apply to non-procurement contracts.
Applies to all University contracts:
Contractor certifies that it will comply with all applicable provisions of the Equal Opportunity Employment Clause at 44 Ill. Adm. Code 750, Appx. A, which forms a part of this Contract by reference. (775 ILCS 5/2-105).
Applies to contracts with an individual when University is acquiring or providing goods or services:
If Contractor is an individual, or individual doing business as a sole proprietorship, partnership, or LLC, Contractor certifies it is not in default on an educational loan. (5 ILCS 385/3).
Last Updated: June 14, 2016