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Contract Review Process

Policy and Procedures

 

Disclaimer:

The University of Denver Office of University Counsel has prepared this training module for general information and use by University of Denver employees only.  The pages are not intended to provide legal advice for any particular situation.  Legal advice can be provided only in the course of an attorney-client relationship with reference to all the facts of a specific situation.  Accordingly, this information must not be relied on as a substitute for obtaining legal advice from a licensed attorney.

 

To see this information in a PowerPoint® format please click here.

Click here for a Contract Routing Form

Contract Review Process: Background

  • Board Approved Policy 2.10.030 regarding Limits of Authority was adopted by the Board of Trustees on October 18, 1993.
  • Last amended with respect to designating specific individuals with signing authority on October 11, 2006.

 

See http://www.du.edu/bfa/policy/index.html

 

  • Policy 2.10.030 requires the review of “contracts” that have

(1) performance by University of obligations over a period of one year or more;

      or

(2) University commitments in an amount of $20,000 or more; or

(3) possible indemnification or reimbursement by the University or the creation

      of a University liability (including from a lawsuit) in an amount of $20,000 or

      more.

 

  • Policy 2.10.030 defines “CONTRACTS” as any contract or agreement, whether written or oral, which is intended to create a University obligation. 
  • It is not the name or description given to a document or the specified amount that dictates the University’s requirement for contract review but instead it is the intention of the document, i.e. to create an obligation for the University.
  • In general, obligations that should be submitted for contract review include, but are not limited to:
    • Goods and services
    • Real estate
    • Employment
    • Professional and consultant services
    • Affiliations (i.e. memoranda of understandings)
    • Amendments of existing contracts
    • Assumption of risk and releases
    • Registration forms for events
  • Contracts may only be signed by individuals with authority from the Board of Trustees.

 

 

Limits of Authority:

    • Chancellor  (unlimited)
    •  Vice Chancellor for Business and Financial Affairs (unlimited)
    •  Controller (up $250,000, up $1.5 million related to sponsored programs)
    •  Assistant Vice Chancellor for Business and Financial Affairs ( up to $50,000)
    •  Director of Sponsored Programs (up to $500,000 related to Sponsored Programs)
    • Vice Chancellor for Communications (up to $50,000 for media and publications)
    • Vice Chancellor  for University Technology Services (up to $50,000 for computer related activities)

 

    • University Counsel (up to $50,000 for engagement letters for legal or litigation services)
    • Director of Athletics (up $100,000 for contracts for athletic participation)
    • Vice Chancellor of University Advancement (up $500,000 for IRS form 8283- Non-cash Charitable Contribution Form)
    •  Executive Director, Newman Center for Performing Arts (up to $100,000 relating to the Newman Center)
    • Associate Vice Chancellor of University Advancement (up $500,000 for IRS form 8283- Non-cash Charitable Contribution Form)
    • Deans and Vice Chancellors and one other departmental designee (other than the Budget Officer) up to $50,000.
    • The Vice Chancellor for Business and Financial Affairs may designate others in writing with the amounts determined annually.
    • Requests for additional Authority must be made through the Office of University Counsel.

 

Contract Review Process:

         Policy 2.10.030 requires that all “CONTRACTS” be submitted to the  

         Controller and University Counsel for review and approval before

         execution.

  • Policy 2.10.030 requires the Controller, or Controller’s Designee (Budget Officers) to review each contract to confirm that

              (1) funds are available for any payment obligations; and

              (2) insurance or similar coverage is available for insurable risks, in

                    cooperation with Risk Manager (delegated to Risk Management).

  • UNIVERSITY INSURANCE POLICIES  AND PROCEDURES
    • University requires a 3rd Party to have at a minimum general liability coverage of $1 Million per occurrence and $2 Million aggregate and to name the University as an “additional insured.”
    • This requirement should always be part of the initial negotiation of a contract.
    • Contracts with more inherent risks may require increased insurance coverage.
  • UNIVERSITY INSURANCE POLICIES  AND PROCEDURES
    • Tenant User Liability Insurance (TULIP), is available for 3rd parties who do not have insurance that are using University facilities. TULIP is event specific and does not provide continuous coverage for the 3rd party. TULIP provides a $1 Million layer of protection to the University for General Liability coverage.

 

For additional information go to www.du.edu/risk

 

  • UNIVERSITY INSURANCE POLICIES AND PROCEDURES
    • Modification and/or waiver of the requirement of insurance may be approved by the appropriate Dean or Vice Chancellor if after discussion with Risk Management and University Counsel it is shown that the activity or project serves the best interest of the University and the risk to the University is otherwise mitigated.

 

  • Policy 2.10.030 requires University Counsel, or University Counsel’s Designee (Assistant University Counsel or outside counsel), to review each contract to confirm that

              (1) the contract accomplishes the intended purposes; and

              (2) does not present any burdensome or unintended liability risks.

  • Policy 2.10.030 further requires
    • Controller and University Counsel to endeavor to conduct reviews on a timely basis and that the University employee initiating the contract, whenever possible, provide a reasonable period of time for such review.
  • Modified Contract Review Procedures
  • Exceptions Process Flow Chart
    • Sponsored Program
    • Purchasing

 

 

 

Contract Review Process – University Counsel Procedures:

  • Originator submits contract to Office of University Counsel for review
  • Contract logged in and referred to attorney for review (University Counsel, Assistant University Counsel or outside counsel)
  • Confirmation of receipt of contract for review sent to Originator
  • Attorney reviews contract
    • If no changes required, contract approved
    • If changes required, attorney prepares modification memo
  • University Counsel reviews contracts for form and legal sufficiency, for example
    • What is the contract term?
    • Are the deliverables clearly outlined?
    • When is payment due?
    • What are the termination provisions?
  • Other considerations:
    • Does the person signing the contract have authority to sign it?
    • Does it contain dispute resolution provision?
    • Does the contract require the University to do something it cannot legally do or is against University policy?
  • University Counsel does not determine the substance of a contract, e.g.
    • The deliverables.
    • The amount of fees to be paid.
    • When services will be performed (the term).
  • University Counsel review ensures that specific contract provisions protecting the University are included in the contract
  • University Counsel may draft a contract and, if needed, participate in the negotiation of contract terms
  • Modification Memo and contract returned to Originator for changes and approval of changes by 3rd party
  • Originator is responsible for making or submitting to 3rd party changes to contract and the return to University Counsel of the revised contract for approval
    • Attorney reviews contract to ensure changes are made
    • If all changes are not made, contract returned to originator for additional changes
    • If all changes are made, contract forwarded to Originator to obtain authorized signature
  • Once approved,  contract may be sign by authorized signatory
  • University Counsel approval is only one step in the University Contract Review Process
    • Other required administrative review and approval may be required in University rules, policies, and procedures, i.e. ATIG, Capital Improvements, Sponsored Programs.
    • It is the responsibility of the Originator to ensure adherence to such rules, policies and procedures.
    • Not complying with other administrative or departmental reviews will delay review of the contract by University Counsel.
  • Form contracts that have been previously reviewed and approved by University Counsel do not have to be submitted for review before each execution unless substantive changes have been made.
  • Please confirm with University Counsel regarding the use and execution of approved form contracts.
  • Consequences of failure to follow policy:
    •  Contract may be void or voidable
    •  Employee may be subject to disciplinary action and/or personal liability
    • University subject to audit findings (an area of potential control weakness, policy violation, financial misstatement, or other issue identified during the University’s audit and reported to the Board of Trustees.)

    Click here for a Contract Routing Form