Contracts/Purchasing
Confidentiality
or Non-disclosure agreements
Issues
in Industry Research Agreements
A contract is an agreement between two or more parties to do or not do a particular thing. There must be a common understanding among the parties as to the essential terms, there must be mutual obligations, and there must be "legal consideration," meaning that something of value is exchanged.
Some contracts may be oral; others must be written to be enforceable. For example, contracts for the sale of goods valuing $500 or more (G.S. 25-2-201(1)), contracts for the sale of land or for leases (G.S. 22-2) and any commercial loans over $50,000 (G.S. 22-5) must generally be in writing to be enforceable.
When a contract for goods is written, a court will enforce the terms of the written contract and will generally not consider prior oral agreements that conflict with the written terms. (For example, see the "Parole Evidence Rule," G.S. 25-2-202(1)). Further, an agreement may be a binding contract even though neither party pays money to the other.
Examples of contracts include: agreements for purchase or rental of goods or services; nondisclosure agreements; agreements that set terms or restrictions on the acceptance of "gifts"; a sale, lease, and sometimes even the donation of University goods or services; liability waivers; settlements of disputes; licenses; student or faculty exchange agreements; memoranda of understanding or cooperation; hotel reservations that require written agreement, the right to use the University name or resources, etc. The concept of a "contract" is quite broad, so to be on the safe side you should assume that any agreement or understanding with another party could be a contract.
How can you tell if an agreement is a University contract?
If you arrange a contract or agreement (bearing in mind that authority to sign an agreement is very limited, as noted below) while acting in the scope of your employment for the University, it is likely a University contract. There must be a University interest at stake.
In addition, the agreement must be within your employment duties as authorized by your supervisors. In general, agreements are not University contracts if they are entered on behalf of a separate legal entity such as a foundation (including those affiliated with the University), or a student organization, or purely private interests. Further, it is unlawful to use a public purchase for private benefit (G.S. 143-58.1).
Who has authority to enter or approve contracts for NC State University?
As a general rule, only the Chancellor and certain Vice Chancellors have the authority to execute (sign) contracts for the University. Anyone else who enters into a contract that purports to bind the University or its subunits is acting without authority and could be held personally liable for the contract. (See G.S. 143-58)
In general, the Vice Chancellor for Finance and Business signs all contracts except those for sponsored programs and EPA appointments; the Vice Chancellor for Research, Outreach, Extension, and Economic Development has authority to sign contracts for sponsored programs; and the Provost has authority to sign EPA appointment letters and international exchange and academic compensation agreements. These Vice Chancellors have delegated in writing certain parts of their signatory authority to specified individuals. (See Administrative Regulation on the Procedure for Delegation of Authority to Sign Contracts)
Small purchases (up to $5000) may be done by departments without going to a Vice Chancellor (or designee) for approval, as long as there is no formal purchase order or written contract or agreement involved.
Purchases between $5000 and $35,000 are normally executed through a purchase order issued from the NC State Purchasing Department. Bids are sought and standard Terms & Conditions are used in lieu of obtaining a Vice Chancellor's signature.
Where should you go for information on contract and purchasing procedures?
For more information, the NC State Purchasing Department has a webpage with Purchasing Procedures and Other Information and the NCSU Administrative Procedures Manual, Section K, Purchasing, or see the Contract Management Web page.
You may also call Purchasing (515-2171) for information on:
- purchases
- contracts other than purchases
- customs clearance for imported goods/equipment
- surplus property issues, and related topics.
Does Legal Affairs have recommendations about what types of contract terms to accept, and what types to modify?
Yes. The first recommendation is that you read the contract terms closely and understand the business risks they pose. If you don't understand certain terms, ask Purchasing or Legal what they mean.
The second recommendation is that you compare the terms to the CHECKLIST used by Legal and Purchasing. This will enable you to anticipate potential areas of disagreement between the University and the other party to the contract, and possibly work around those concerns before the contract goes to Purchasing and Legal for review and modification.