Frequently Asked Questions (FAQs)
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.
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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.
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.
- 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.
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?
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.
- 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.
8. Are there any University-approved standard contracts that I can use?
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9. Can I use the other party’s contract?
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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?
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11. Are there checklists or any other resources to help me learn about and negotiate contract provisions?
- 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.
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 requirements?
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.
16. Are there special requirements pertaining to international contracts?
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.
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.