Basic Legal Principals for Contract Administrators
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1 Basic Legal Principals for Contract Administrators 1 S R A I N T E R N A T I O N A L D E L A W A R E V A L L E Y C H A P T E R M E E T I N G J U N E 8, P r e s e n t e r s : C a r o l y n K e n d a l l P o e r i o, C R A G r a n t M a n g e r, U n i v e r s i t y o f P e n n s y l v a n i a G r a d u a t e S c h o o l o f E d u c a t i o n A d a m R i f k i n d, E s q. A s s o c i a t e D i r e c t o r, U n i v e r s i t y o f P e n n s y l v a n i a O f f i c e o f R e s e a r c h S e r v i c e s
2 Learning Objectives 2 Understand the basic legal principles of contracts and the importance of proper drafting. Effectively determine the appropriate agreement type for a situation.
3 Key Points 3 Explain basic legal concepts about contracts and agreements; Advise on good drafting techniques; Describe different kinds of contracts and agreements; Give insight into the perspectives of various kinds of parties with which a university will contract for research.
4 What is a Contract? 4 The writing which contains the agreement of parties, with the terms and conditions, and which serves as a proof of the obligation -Black s Law Dictionary, 4 th Edition, West Publishing Co.: St. Paul, MN, 1951
5 Basic Concepts: Why use contracts? 5 (1) to memorialize the agreement of parties, so they may refer back to the contract to ensure proper performance of their respective obligations; and (2) to provide a neutral third party, such as a judge or mediator, with a document to interpret, in order to determine the intent of the parties.
6 Basic Concepts: Four corners 6 Interpretation of a contract is limited to the language in the contract. Statements outside of the agreement are parol evidence and generally will not be considered by a court interpreting the contract. Only terms in the contract are enforceable. Counts! Pitfalls: My program officer said, That s clarified in an Parol Evidence DOES NOT COUNT
7 Drafting: Entire contract 7 An integration clause provides that the agreement is the sole expression of the intent of the parties, and supersedes any previous writings or expressions. It reinforces the parol evidence rule that only terms in the contract will be enforced. Sample clause: This Agreement embodies the entire understanding between the parties relating to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral.
8 Drafting Tips 8 Use clear and unambiguous language Use simple sentence structures. Limit a sentence to one or two subordinate clauses. Avoid passive voice. University will be invoiced. Subrecipient will invoice. Provisions should be a definite as possible. Example: In a payment clause, there should be as little room for interpretation as possible. When is the payment due? How long does the payer have to make the payment?
9 Drafting Tips (con t) 9 Express a list in a sentence by using numbers or letters, separated by semi-colons. For lists with lengthy or wordy items, use bulleted or numbered phrases that are separated with carriage returns.
10 Drafting Tips: Reasonable person 10 Include a reasonable person standard of performance to clauses that provide for activities to be performed to the satisfaction of the other party. The reasonable person standard creates an objective standard of a person who exercises average care, skill, and judgment. Which clause sounds more objective? Payment is due upon submission of satisfactory data sets for each subject. Payment is due upon submission of reasonably satisfactory data sets for each subject.
11 Drafting Tips: Amendments 11 Amendments are contracts that change the terms of other contracts. Be aware of the difference between unilateral and bi-lateral amendments. Poorly written amendments can impose new policies or terms on previous periods of the contract. Amendments to add funding or extend a simple time period can be misleading. Pay specific attention to current amounts funded versus cumulative amounts funded.
12 Drafting: Contract breach 12 When a party to an agreement does not adhere to the terms of the agreement, they are said to be in breach. A provision for breach should explicitly outlines the terms for how each party acts in the event one party is not behaving as expected, either with payment or performance. It s important to remember that either party can breach an agreement. At the time of agreement, neither party can predict what will happen.
13 Drafting: Represent, Certify, and Warrant 13 REPRESENT - statement express or implied... to the other [party], before or at the time of making the contract, in regard to some past or existing fact... Which is influential in bringing about the agreement. CERTIFY - [t]o testify in writing; to make known or establish as a fact ; to vouch for a thing in writing ; [t]o warrant. WARRANT - to engage or promise that a certain fact or state of facts, in relation to the subject-matter, is, or shall be, as it is represented to be. Quotes: Black s Law Dictionary, 4 th Edition, West Publishing Co.: St. Paul, MN, 1951
14 Contract subject to sponsor policies 14 Counts! Including anything I say here that references something somewhere else. as referenced in Foundation s World Domination Policy. Incorporation by reference: Rather than inserting the language in the contract, the drafter references an external document. This is a way to avoid large documents and the parol evidence rule, simultaneously. World Domination Policy Parol Evidence DOES NOT COUNT Counts!
15 Contract subject to sponsor policies 15 Incorporation by reference poses pitfalls BEWARE a) Review the document being incorporated it may conflict with institutional policies or with terms in the contract; b) If the reference is to a Web site, check the URL it may be broken or obsolete; c) For a document that is expected to change, but be well documented, such as a protocol, use the phrase, as amended. Conversely, if it is a policy or list of representations, for instance, then use the phrase, in effect at the time of execution.
16 Agreement Type: Beyond Grant vs. Contract 16 Agreement Data Use Agreement (DUA) Material Transfer Agreement (MTA) Activity One party wants to use the data or information of another party. Often used for Limited Data Sets. Materials, i.e. software, biological materials, are distributed from one party to another. Technology/Equipment Loan Collaboration Agreement Confidential Disclosure Agreement (CDA) or Non- Disclosure Agreement (NDA) One party provides equipment or devices for use with the intention of returning the device. Common when a company request s an investigator s opinion on a product. Projects undertaken by two or more parties, where no funds change hands. One or both parties intends to disclose confidential information for a specific purpose.
17 Agreement Types: Data Use Agreement 17 Key elements of a Data Use Agreement: What information precisely will be shared? Who precisely can use the data? For what exact purpose can the data be used? For what purpose is the use of data expressly prohibited? When does this agreement expire? Contact information Breach Clause Governing law
18 Agreement Types: Equipment Loans 18 WHY?
19 Agreement Types: Equipment Loans 19 Who owns the equipment? Who is responsible for costs of shipping, insurance, installation? Who owns the data generated? Can the institution publish?
20 Various Parties 20 Types of Parties Institutes of Higher Education - Private Foundations Industry/Commercial Sponsors Nonprofit Associations Government Institutes of Higher Education - State Likely Motivations Public health benefit and/or education Wild Card! Do your homework. Profit Mission driven Broad focus on public benefit. Benefit of the citizens of the state.
21 Considerations for Parties 21 Types of Parties Institutes of Higher Education - Private Foundations Industry/Commercial Sponsors Nonprofit Associations Government Institutes of Higher Education - State Data Use Agreement Reserve the right to publish. Ownership of new IP. Atypical Sending Data to: Ability to use the data for commercial purposes. Consider licensing. Receiving Data from: Be mindful of reach through rights to own future inventions using data. Rights to publish or republish copyrighted material. Right to use new IP, including sharing with other partners. DUA s from government entities tend to be inflexible. Reserve the right to publish. Ownership of new IP. Be mindful of indemnification.
22 Contact Information 22 Carolyn Kendall Poerio, CRA Adam Rifkind, Esq.
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