Dear Vice Presidents, Deans, Directors and Business Managers:

Transcription

1 Francine T. Bazluke Vice President for Legal Affairs and General Counsel May 31, 2016 Dear Vice Presidents, Deans, Directors and Business Managers: I would like to take a moment of your time to remind you of the types of contracts that the Office of General Counsel (OGC) reviews as required by University policy. This letter also shares with you in an attachment general guidance on contract terms developed by OGC, Purchasing, and Risk Management. As you may recall, OGC has implemented an electronic process for submission of contracts requiring attorney review and approval. - To ensure timely review, please submit non-template contracts using the Electronic Contract Approval and Routing Form at least 30 days before the planned effective date of the contract: - Once you have completed the Electronic Form, you will receive periodic notifications from our contract database, Footprints, as to its review status. Please submit your communications with the OGC assigned attorney as replies to the Footprints that you receive to maximize clarity and efficiency. - Contracts executed on OGC-approved templates can continue to be submitted in hard copy for signature to 357 Waterman Building. A list of the contracts that must be reviewed by OGC is attached to this letter. We ask for your cooperation in limiting your submissions to the matters on the list so that we can ensure prompt review of the essential agreements. Please do not hesitate to contract us if you are unsure if a document should be reviewed by counsel. We would be pleased to work with you to develop templates for recurring situations that result in agreements that need not be reviewed by legal counsel. Thank you for your cooperation. Attachments - 2 Francine Tilewick Bazluke Vice President of Legal Affairs & General Counsel {V }

2 TYPES OF CONTRACTS OR CONTRACT PROVISIONS General Counsel Review 1 ACADEMIC Naming of academic programs as a condition of a gift or otherwise Changes to the administration of a gift or gift funds Clinical affiliation agreements for student placements (not using UVM template) REC International academic collaboration agreements REC Study abroad program agreements REC CONTRACTS Misc. Contract whose aggregate term exceeds 5 years, regardless of cost, and including possible renewals HIPAA Provisions (Business Associate Agreements that deviate from OGC-approved template) REC Settlement of claims and lawsuits agreements Provisions relating to confidential data, including trade secrets or proprietary information, and data security REC Contracts relating to programs involving minors REC Contracts for professional consulting services at aggregate cost of > $250K Revenue-generating contracts in which a UVM unit or program is the vendor and the cost to the contractee is > $1m over the term of the agreement Agreements for UVM to pay for city services CORPORATIONS Agreements with affiliated organizations, and material revisions to such agreements Creation or dissolution of affiliated organizations or foundations EMPLOYMENT AND LABOR Collective bargaining agreements, and amendments thereto Separation agreements with officers of administration REC FACILITIES AND REAL ESTATE Naming of buildings as a condition of gift or otherwise Lease or sublease with an annual aggregate rental value of > $500,000, and renewals Lease whose aggregate term exceeds five years, regardless of cost Purchase, sale exchange or transfer of UVM real property interests at value of > $1m FINANCE Independent audit firm retention REC Independent audit firm retention for non-annual audit work > $10K REC Loans, lines of credit and other financing at value > $1m PROCUREMENT Contract with a vendor for purchase of goods, services or equipment at aggregate cost of > $1m Software purchase where software requires the storage or sharing of confidential data with a third party REC RISK MANAGEMENT Changes to approved template/boilerplate language on hold harmless, indemnification, choice of law and venue, insurance requirements, additional insured, subrogation LICENSING AGREEMENTS Licensing agreements for the use of UVM trademarks May 25, If review is strongly recommended, but not required, the entry is flagged as follows: REC {V }

3 OFFICE OF THE GENERAL COUNSEL Contractual Provisions to Monitor in Agreements 1. Insurance: The vendor needs to meet UVM requirements (per Procurement and Risk Management terms and conditions). Consultants and licensed professionals must provide proof of professional liability. All vendors serving alcohol must provide proof of liquor liability insurance. Additional items to note: a. Waiver of subrogation language generally is not in the interests of UVM, except in instances where UVM is leasing property from another party. b. Obtaining additional insured status from third parties on their liability policies is desirable [note: This will not be possible on workers compensation or professional liability insurance policies]. c. Notice of cancellation provisions should be limited to: Any notice of cancellation or non-renewal of insurance before the expiration date thereof will be delivered to the University in accordance with the policy provisions. 2. Indemnification: These clauses tend to be the most contentious. Obviously, we prefer mutual and even-handed indemnification provisions to those that place risk unevenly on the University. We uniformly reject indemnification clauses that provide for indemnification for the intentional or willful misconduct of employees. Sample of a mutual indemnification: Each party (the Indemnifying Party ) agrees to defend, indemnify and hold harmless the other party and its respective directors/trustees, officers, employees, and agents (collectively, the Indemnified Party ) from and against any and all claims, actions, damages, liability, cost and expenses (including attorney s fees) including loss of life, bodily injury or damages to property (collectively, a Claim ) arising from the negligence of the Indemnifying Party, except to the extent that such Claim arises from the negligence of the Indemnified Party. 3. Jurisdiction: For dispute resolution purposes, we can agree to be bound by a particular state s law for choice of law purposes, but not its jurisdiction. While we prefer the applicability of Vermont law, in some cases there may be reasons to agree that a transaction will be governed by the law of another place. However, we seek to strike provisions that require the University to submit to the exclusive jurisdiction of another state s courts.

4 4. Waiver of Jury Trial, Shortening of Statutes of Limitations, or Waiver of Access to Courts: These types of provisions, by which the University is asked to surrender meaningful legal rights, must be avoided. 5. Characterization of UVM: We prefer that the University be characterized as a non-profit educational corporation and instrumentality of the State of Vermont. 6. Force Majeure clauses need to be mutual i.e., neither UVM nor the vendor should be considered in default of performance of contract for acts of God, war, or other events outside the reasonable control of a party. 7. Privacy: We must take care to ensure that vendors agree contractually to honor the University s privacy obligations if they will obtain through the course of during business with, or for us, personal, private, or protected data. Federal laws such as FERPA (student information), HIPAA (personal health information) and Gramm-Leach Bliley (personal financial data) may need to be specifically referenced. 8. Confidentiality: Because the University is subject to the Vermont Public Records Act (PRA), we cannot promise to keep confidential the terms of our contracts for goods or services. Contract clauses that seek this type of confidentiality must include the words except as otherwise required by law or some other language by which the vendors recognize the University s legal obligations. It is also good practice to let vendors know, before reaching the contract execution stage, of the University s public status so that they will understand the possibility of public disclosure of the contract or contract terms. If a contract term includes assertions of confidentiality of trade secrets, the General Counsel s Office should be asked to assess whether the information characterized as trade secrets would likely be granted that status under the PRA. 9. Non-solicit, non-compete, or non-hire covenants are problematic. We should resist inclusion of these provisions. 10. Product Defect: The vendor needs to assume risk for its negligence and any defects in its product. 11. Infringement: For software and other products that may be licensed or patented, we need to make sure that vendor agrees to indemnify us for any costs we might incur due to claims involving intellectual property rights and infringements. 12. Limitation of Liability: While there are several ways to improve these clauses, our first preference is to have them removed. These clauses are particularly troublesome with regard to unknown products that may pose a significant risk to health or safety. Further, we do not want vendor to limit its liability to UVM to the value of the contract or purchase order, nor to the extent of the vendor s insurance limits. 13. Vendors often seek a provision relieving them from liability for consequential or indirect damages (i.e., loss UVM might incur involving business interruption, failure of a product to be delivered in time and thus, interrupt research, etc.) While it is difficult to get vendors to strike these clauses, we should make sure, at the very least, that at the end we add wording such as

5 This limitation of liability shall not apply if bodily injury, death or property damage resulting from vendor s intentional misconduct or negligent acts or omissions. 14. Risk of Loss: Clauses that place the risk of loss (and the burden of obtaining insurance) on the vendor until goods are delivered to the University are preferable to those in which the risk of loss shifts at the point of shipment. Thus, it is best to have terms on the basis of F.O.B. destination (i.e. UVM) vs. F.O.B. shipping point --that way, the risk of loss passes to UVM when the product is delivered to UVM. 15. For Clauses where Vendor requests proprietary information be kept confidential, make sure there is a statement that provides an exemption from the confidentiality requirement if a regulatory authority or court orders disclosure of such information. See also paragraph 8 above. 16. Dollar Amount: The value or term of the contract will determine who is authorized to sign the agreement and, in some instances, whether General Counsel review is required. Careful attention should also be paid to contracts that are performed over a period of time with optional renewal periods. The overall total spend under the full contract term will determine who has signatory authority. 17. Duration: In general, we prefer to avoid commitments of longer than three years. Additionally, we try to avoid provisions that result in automatic renewal unless some affirmative action is taken to cancel. It is difficult for departments to monitor and keep track of the timing of notice requirements to cancel and we have occasionally ended up with renewals when they were not intended or desired. We prefer language that allows renewal for a term of upon mutual written consent of the parties. 18. Arbitration: The responsible Vice President must authorize the inclusion of arbitration provisions. Also, Vermont law requires a boilerplate acknowledgement of arbitration (contact the Office of General Counsel for the boilerplate language). Relevant Policies Contract Approval and Signatory Authority: Procurement Policy: Procurement Matrix: Cc: Office of the Controller Purchasing Services Department of Risk Management Rev. May 25, 2016