Contract FAQs

1.	What is a contract?
2.	Must all University contracts be in writing?
3.	Are there any requirements for University contracts?
4.	I do not know the University’s contracting policies. Where do I go for help?
5.	Why is there not one uniform contracting policy for the University?
6.	Whom do I contact for help with written contracts?
7.	What contracting resources are available to me?
8.	Are there any University-approved standard contracts that I can use?
9.	Can I use the other party's contract?
10.	I have been using a form for many years that has worked well for me. May I continue to use it?
11.	Are there checklists or any other resources to help me learn about and negotiate contract provisions?
12.	Do I have authority to bind the University?
13.	If I have authority to bind the University, why do I need to follow the University’s contracting policies?
14.	What if I have authority to bind the University and enter into a contract without following the University’s contracting requirements?
15.	Are there special contract requirements for academic affiliations and collaborations with other institutions?
16.	Are there special requirements pertaining to international contracts?
17.	Are there special contract requirements regarding the use of the University’s name and trademarks?
18.	Where can I learn more about insurance provisions and the University’s insurance requirements?
19.	Where can I learn more about the University’s tax exempt status and how it relates to contracts?
20.	What if a problem arises after a contract is signed?

1. What is a Contract?

A contract is an agreement between two or more parties creating enforceable obligations. It spells out what each party promises to do.

Most contracts obligate a party to take some affirmative action, such as provide goods, perform services, or pay money. Occasionally, a contract obligates a party not to do something, such as not hire a competitor or not disclose information. Other contracts do not involve the exchange of money at all, such as a license to use data or a release from liability.

A contract can take many forms, ranging from a detailed written agreement (the preferred form) to a brief verbal exchange (appropriate only when written contracts are not possible). Examples of written contracts that you may come across include preprinted forms (with or without modification) as well as documents labeled “terms and conditions,” “purchase orders,” “letter agreements,” “leases,” and “waivers”—basically any document under which the University undertakes an obligation to another party.

A well-drafted, written contract contains the basic information necessary to understand the intent of the parties. Some examples include the names of the parties, the duration of the agreement, the responsibilities and obligations of each party, the terms of payment (if any), the procedure for termination of the agreement, and signature lines for authorized individuals to execute the agreement. The Contract Provisions Checklist outlines these as well as other types of provisions that should be included in University contracts.

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2. Must all University contracts be in writing?

A good rule of thumb: if you could imagine ramifications to the University arising out of a contract, it should be in writing and comply with University contracting requirements. This means that a written contract is required for many transactions. (Appropriate exceptions include transactions with restaurants to deliver food, transactions using credit cards and transactions for which individuals will submit reimbursement vouchers. Please contact the Purchasing Department for guidelines regarding when credit cards and reimbursement vouchers may be used.)

A well-drafted contract will reduce the risk of misunderstandings between the University and the other party and protect the University’s interests. In most transactions involving the purchase of goods or services, a simple purchase order with Princeton’s General Terms and Conditions attached will serve as the written contract.

Please note that as a general rule, verbal agreements and e-mail exchanges are enforceable contracts. The basic elements of a contract are: offer, acceptance of the offer, and the exchange of something valuable. There is no requirement that these elements be in a formal writing for many contracts. While there are some contracts that must be in writing to be enforceable (e.g., real estate agreements and multi-year contracts), these exceptions do not apply to the majority of contracts at the University.

Verbal agreements and e-mail exchanges, however, lack important details and protections required by the University and should be avoided for significant transactions. For example, parties often reach common ground on the basic and key terms of a transaction (such as the goods being purchased and price) but the negotiation of other important terms (such as warranties and indemnification) does not occur until the parties are in the process of finalizing a written contract.

Since a verbal agreement or e-mail exchange may be enforceable, individuals seeking to contract on behalf of the University should avoid accepting an offer verbally or by e-mail and be clear with the other party that negotiations and the resulting agreement are contingent upon the execution of a written contract that satisfies the University’s contracting requirements.

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3. Are there any requirements for University contracts?

Yes. The majority of transactions on behalf of the University involve the purchase of goods and services. The contracting requirements for most purchasing transactions have been developed by the Office of Finance and Treasury and can be accessed by contacting the Purchasing Department.

For transactions that do not involve the purchase of goods or services, as well as for certain specialized goods and services transactions that do not fall within the purview of the Purchasing Department, contracting requirements for these other transactions have been developed by University departments charged with responsibility for particular types of business transactions.

Common examples of “other” transactions include: construction and renovation services; real estate transactions; facilities-use arrangements; gifts to the University; affiliations or collaborations with other academic entities; sponsored research projects; licenses and other rights-granting transactions; selling goods and services; and disposing of surplus property. Specialized goods and services purchases that are not within the Purchasing Department’s area of responsibility include: the purchase of art for the University’s collection; the purchase of books and other resources for the library system; and the engagement of counsel, auditors and public relations companies.

The Transaction Authority Contact Sheet lists these and various other types of common University transactions and the department responsible for each. The contact sheet also includes contact information for persons in the responsible department who can assist you with your contracting needs. If you cannot find your transaction on the contact sheet, please contact University Counsel Hannah Ross (8-2525), University Counsel Yoo-Kyeong Kudo (8-7789), or General Counsel Peter McDonough (8-2511) in the Office of the General Counsel for guidance on where to go.

Before entering a contract or making any commitment (written, verbal or implied), contact the responsible department for the type of transaction you are considering to ensure you know the applicable University contracting requirements (for example, certain contracts, such as real estate contracts, may only be signed by specific officers of the University).

The responsible department can assist you with:

familiarizing yourself with the University’s contracting processes and requirements for the particular type of transaction (including, if applicable, requirements for selecting or working with another party, competitive bidding and sole source justification);
for many transactions, providing University-approved standard contracts that can be adapted for your particular purposes;
understanding key terms that must be included in contracts to protect the University;
negotiating contract terms that protect the University; and
identifying when a contract or certain provisions require further review or approval by other University departments, such as Environmental Health and Safety, the Office of Communications, the Risk Management Department, or the Office of the General Counsel.

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4. I do not know the University’s contracting requirements. Where do I go for help?

As discussed in the answer to Question #3, your best resource for University contracting requirements is the department responsible for the type of transaction you are considering. The Purchasing Department is responsible for most purchasing transactions. For other transactions, the responsible department can be identified by reviewing the Transaction Authority Contact Sheet, which also lists common University transactions and contact information for persons in each department who can assist you with your contracting needs. If you cannot find your transaction on the contact sheet, please contact University Counsel Hannah Ross (8-2525), University Counsel Yoo-Kyeong Kudo (8-7789), or General Counsel Peter McDonough (8-2511) in the Office of the General Counsel for guidance on where to go.

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5. Why is there not one uniform contracting policy for the University?

Contracts vary widely because they can be used for many different types of business. Take, for example, the difference between a contract for the purchase of office supplies, which is the responsibility of the Purchasing Department, and a contract for the construction of a new 150,000 square-foot building, which is the responsibility of the Vice President for Facilities. The construction contract will require additional levels of University review, additional protections against liability and additional provisions; in other words, the issues and procedures for two contracts are different. To have one uniform contracting policy for the University would not be practical.

The contracting process at Princeton is based on policies, processes and systems developed by the University’s academic and administrative officers charged with the responsibility for particular types of business transactions. Because University departments have different needs based on factors ranging from the nature and value of their transactions, the customary industry practices for their transactions, and the degree of internal University oversight and review required, their contracting policies may not always be uniform.

Nonetheless, many University contracting requirements are similar, and you can learn about the contracting requirements for your transaction by contacting the responsible department.

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6. Whom do I contact for help with written contracts?

As discussed in the answer to Question #3, your best resource is the department responsible for the type of transaction you are considering. The Purchasing Department is responsible for most purchasing transactions. For other transactions, the responsible department can be identified by reviewing the Transaction Authority Contact Sheet, which also lists common University transactions and contact information for persons in each department who can assist you with your contracting needs. If you cannot find your transaction on the contact sheet, please contact University Counsel Hannah Ross (8-2525), University Counsel Yoo-Kyeong Kudo (8-7789),or General Counsel Peter McDonough (8-2511) in the Office of the General Counsel for guidance on where to go.

Before entering a contract or making any commitment (written, verbal or implied), contact the responsible department for the type of transaction you are considering to ensure you know the applicable University contracting requirements (for example, certain contracts, such as real estate contracts, may only be signed by specific officers of the University).

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7. What contracting resources are available to me?

First, as discussed in the answer to Question #3, your best resource is the department responsible for the type of transaction you are considering. The Purchasing Department is responsible for most purchasing transactions. For other transactions, the responsible department can be identified by reviewing the Transaction Authority Contact Sheet.

Second, Additional Resources for Contracting contains practical and educational tools developed by the Office of the General Counsel, including:

Standard Contracts that can be adapted for your contracting needs. Use of standard contracts is strongly encouraged because they protect the University’s interests, and contracts based on them can be reviewed and approved more quickly than a contract supplied by the vendor/other party.

Checklists to help you negotiate contracts with provisions that protect the University. In particular, the Contract Provisions Checklist provides tips for negotiating important provisions that should be included in most types of University contracts.

Contract Provisions and Explanations provides explanations and model provisions for some of the most important provisions that should be included in University contracts, such as provisions regarding payment terms, termination, insurance, indemnification, warranty, intellectual property, confidentiality, and tax exemption. The explanations present background on what the provisions mean, how they serve to protect the University’s interests and why they are ordinarily required in University contracts.

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8. Are there any University-approved standard contracts that I can use?

Yes. The Office of the General Counsel has developed several standard contracts that can be adapted for your contracting needs. Use of these standard contracts is strongly encouraged because they protect the University’s interests, and contracts based on them can be reviewed and approved more quickly than a contract supplied by the vendor/other party. Before using a standard contract, however, you should always check with the department responsible for the type of transaction you are considering to find out which contract you should use. Certain transactions require the use of a modified version of a standard contract or the use of a specialized contract that is not available on this website, and in such cases use of any other contract will not comply with University requirements.

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9. Can I use the other party’s contract?

Doing so can be to the University’s, as well as your office’s or department’s, disadvantage. In many instances, the other party’s contract will be one-sided, favoring the other party over the University, and may contain terms that either the University cannot accept or are against University policy. Furthermore, many of these documents are standard, one-size-fits-all agreements with boilerplate language that is meaningless for your particular transaction.

The ultimate decision with respect to whether to use another party’s contract as a starting point for negotiations rests with the department responsible for the type of transaction. (The Office of the General Counsel strongly encourages a consult with it before the responsible department agrees to use another party’s contract.) Even if the responsible department agrees to proceed with the other party’s contract, the document most likely will need to be revised to include provisions and protections required by the University. This will slow down the process because you will have to negotiate terms with the other party (as directed by the responsible department) and, if final review of the contract is required by the responsible department, review may take longer.

If you have a question about another party’s contract and cannot determine which department is responsible for your particular transaction, contact University Counsel Yoo-Kyeong Kudo (8-7789) in the Office of the General Counsel.

Individuals contracting on behalf of the University are ultimately responsible for negotiating appropriate contracts, and therefore, they are advised to take advantage of available contracting resources (see Question #7) and execute written contracts that comply with University requirements.

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10. I have been using a contract form for many years that has worked well for my department. May I continue to use it?

All contracts must comply with University contracting requirements. As long as your form includes appropriate provisions and protections required by the University, it may still be usable. Please consult with the responsible department before proceeding. The department will review the form and let you know whether it is approved. If you have a question about a form and cannot determine which department is responsible for your particular transaction, contact University Counsel Yoo-Kyeong Kudo (8-7789) in the Office of the General Counsel.

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11. Are there checklists or any other resources to help me learn about and negotiate contract provisions?

Yes. The Office of the General Counsel has developed several resources including:

Contract Provisions and Explanations provides explanations and model provisions for some of the most important provisions that should be included in University contracts, such as provisions regarding payment terms, termination, insurance indemnification, warranty, intellectual property, confidentiality, and tax exemption. The explanations present background on what the provisions mean, how they serve to protect the University’s interests and why they are ordinarily required in University contracts.
The Checklists page contains the Contract Provisions Checklist, which outlines important provisions that should be included in most University contracts and provides tips for negotiating provisions that protect the University. Before using a checklist, however, you should always check with the department responsible for the type of transaction you are considering to find out whether there are any additional contracting requirements and whether there are any provisions not identified on a checklist that must be included in your contract. For certain transactions, there may not be an applicable checklist, and in such cases reliance on an inapplicable checklist could result in a contract that does not protect the University against risk.

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12. Do I have authority to bind the University?

The University has adopted a Transaction Authority Policy (available on the Transaction Authority project website) that explains who has authority to bind the University. Under the University’s bylaws, the President is authorized to transact business on behalf of the University with other parties either personally or by delegating that authority to others. Through the Board of Trustees and the President, the University’s academic and administrative officers (as designated by the bylaws) have been delegated specific areas of responsibility and duties, including the authority to transact business. The officers may further delegate their authority, as necessary or desired, consistent with University policy. Therefore, it follows that University employees, including officers, faculty and staff, may bind the University only if they have been delegated specific authorization to do so.

Please note that even if you have authority to bind the University with respect to a particular transaction, the Transaction Authority Policy provides that this authority is conditional on compliance with applicable University policies, processes, and systems for execution. Thus, you may only bind the University to a contract if you adhere to the University’s contracting requirements. For example, although many employees have some degree of authority to buy goods and services, they must follow the University’s policies, processes, and systems for purchasing to actually contract and buy goods and services.

If you have any questions regarding whether you are authorized to bind the University with respect to a particular transaction, please review the Transaction Authority Policy and consult with your supervisor. Questions about the policy may be addressed to University Counsel Hannah Ross (8-2525), University Counsel Yoo-Kyeong Kudo (8-7789), or General Counsel Peter McDonough (8-2511) in the Office of the General Counsel. Additional transaction authority resources can be found on the transaction authority project website.

Note: Students do not have authority to bind the University. On all contract issues, undergraduate student organizations should work with the Office of the Dean of Undergraduate Students and graduate student organizations should work with the Office of Graduate Student Life.

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13. If I have authority to bind the University, why do I need to follow the University’s contracting requirements?

The University’s Transaction Authority Policy provides that the authority to bind the University is conditional on compliance with applicable University policies, processes, and systems for execution. This is necessary to make sure that the University’s interests are protected and the University is not exposed to improper legal or financial risk. Thus, you may bind the University to a contract only if you adhere to the University’s contracting requirements.

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14. What if I have authority to bind the University and enter into a contract without following the University’s contracting requirements?

Since your authority to bind the University is conditional on compliance with applicable University policies, processes, and systems for execution, you do not have authority to bind the University to a contract unless you adhere to the University’s contracting requirements. If you contract on behalf of the University without satisfying the University’s contracting requirements, you may be held personally liable for the terms of the contract or transaction.

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15. Are there special contract requirements for academic affiliations and collaborations with other institutions?

Yes. They must be preapproved by the Office of the Provost. Please contact the Vice Provost for Academic Programs with respect to domestic affiliations and collaborations and the Vice Provost for International Initiatives with respect to international affiliations and collaborations.

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16. Are there special requirements pertaining to international contracts?

Yes. Any international contract that may have financial, legal, curricular, organizational or reputational implications for the University (including offices, programs and departments) must be developed and processed through the Council for International Teaching and Research and the Vice Provost for International Initiatives. For more information, please refer to International Princeton and Establishing Partnerships Frequently Asked Questions.

In addition, please see Payment for information regarding currency and tax withholding requirements in international contracts.

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17. Are there special contract requirements regarding the use of the University’s name and trademarks?

Yes. Virtually all contracts must include a provision prohibiting the use of Princeton’s name and trademarks without the prior written approval of the University. Trademark Licensing approves commercial uses of the University’s name and trademarks, and the Office of Communications approves all other uses of the University’s name and trademarks. The Office of Communications must also approve all uses of images of the University’s campus.

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18. Where can I learn more about insurance provisions and the University’s insurance requirements?

Please see Insurance and the Risk Management Department’s website.

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19. Where can I learn more about the University’s tax exempt status and how it relates to contracts?

Please see Tax Exemption.

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20. What if a problem arises after a contract is signed?

If you contract on behalf of the University, it is your responsibility to ensure that the University fulfills its obligations. Likewise, in the event the other party fails to fulfill its contractual obligations to the University or other problems arise, it is your responsibility to ensure that the University enforces its rights. Some examples of problems that could arise include: the other party damaging University property; failing to pay the University what is owed under a contract; delivering nonconforming or nonworking products; or providing inadequate services.

If any questions or issues arise regarding performance of a contract or enforcement of the University’s rights, you should contact the responsible department for your particular transaction. (The responsible department can be identified by reviewing the Transaction Authority Contact Sheet.)

If you have a question about contract performance and cannot determine which department is responsible for your particular transaction, contact University Counsel Yoo-Kyeong Kudo (8-7789) in the Office of the General Counsel.

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Note: This website is for your general information and education only and does not constitute legal advice. Please feel free to contact the Office of the General Counsel with specific questions regarding contract law as it applies to your University contracts.

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