1. Module 6
Ken Hogan

2.  What is a Contract?
 Categorizing Contracts
 Initial Development and Submission
 Formal Review of Contract Terms
 Time Lines, High-Risks Agreements, and
Special Procedure Contracts
 Finalizing and Executing the Agreement
 Contract Administration
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3.  Determining the Initial Step
 Everything you wanted to know about contract law squeezed
into about 30 minutes.
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4. A contract is an agreement between two parties
that creates an obligation to perform (or not
perform) a particular duty. A legally
enforceable contract requires:
1. An Offer (I’ll mow your lawn this weekend, if you
pay me $30)
2. An Acceptance (You’ve got a deal)
3. Consideration (The value received and given – the
money and the lawn mowed)
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5.  A legally recognized offer and an acceptance
creates a “meeting of the minds’, or mutual
assent, between the parties.
 Mutual Assent requires the presence of the
following factors:
1. Both parties must exhibit a “contractual intent”
[words spoken in jest or frustration will lack the
requisite intent];
2. The terms of the offer must be clear and definite;
3. The acceptance must be clearly communicated.
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6.  Required Clarity: For terms to be legally valid,
a reasonable person must be capable of readily
understanding them.
 Four primary areas in determining definite
terms:
1. the parties;
2. time for performance (term or service
schedule);
3. the price; and
4. the subject matter or scope of service.
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7.  Consideration must be mutual. Both parties
must receive something of value.
 Involvement of money is not required.
 Contracts vs. Gifts
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8. Sources of Contract Law
 Common Law – Court made case law governing
contracts (primary law for service contracts)
 Uniform Commercial Code (UCC) –
[Tex. Bus.& Comm.Code] – governs sales of tangible
goods and secured transactions (not services).
http://tlo2.tlc.state.tx.us/status.bc.toc.htm
 Specific Statutes – http://www.capitol.state.tx.us
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10.  Affiliation and  Prof. Service
International Program Agreements (for
Agreements individuals not
 Athletic-Specific, or organized as a business)
Student-Specific  Procurement Contracts;
Contracts (non- Vendor Services
procurement in nature).  Sponsored Research
 Interagency Contracts and
Cooperation Sponsored Projects
Agreements (IAC) &  University-Provided
Inter-local Agreements Services
 Museum and Exhibit
Agreements
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11.  University payment is not a defining factor.
[Many procurement contracts actually involve a
vendor payment to UTSA.]
 Generally defined as: A formal agreement with a
business entity to secure a particular service that is
subject to compliance with competitive purchasing
requirements or purchasing policies.
 Competitive requirements can be dictated by:
1. Statutory provisions;
2. UT System polices;
3. Best Value Procedures; and
4. Appropriate business relations. 11

13.  Determining the Need for an Agreement:
1. Vendor-Originated
2. Determination: The risk of the project may
necessitate a formal agreement; or company
Policies may require it.
 Using Sample Agreements
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14.  Where to Route: Regardless of value or cost, route
Procurement Contracts through the Purchasing Office.
 Electronic Purchase Requests
 Establishes approval authorities – Authorizes
implementation – Approves funding
Keep in mind that contracts for vendor goods and
services are the final stage of a proper procurement and
must never precede the purchasing procedures.
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15.  Appropriately weighing the risks of the project
with the most efficient processing methods
requires a clear understanding of the project.
 Upon submission, include the following
information:
1. A clear description of the requested service; and
2. Details related to the purpose and benefit of the
requested service;
Remember, an enforceable contract requires clear and definite terms!
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16. If it is already known that a vendor will be
requesting that its agreement be signed, the
following information should also be included:
1. A short explanation (1-3 sentences) of the
extenuating circumstances that require a vendor’s
contract; and
2. An electronic version of the agreement in modifiable
Word format.
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17. Routing to Assigned Buyer: The electronic
purchase request will automatically route to
your department’s assigned buyer in the
Purchasing Office.
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18. The Purchasing Office Buyer will work with
the Contracts Office and your Department to:
1. Determine the most efficient methods for
project completion;
2. Ensure compliance with company’s
purchasing Regulations and Best Value Polices;
and
3. Accurately define the Statement of Services
(SOW) or Scope of Work.
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19. Developing an Appropriate Statement of
Services (SOS):
1. Does the SOS accurately define what you
want?
2. Will the SOS allow for legitimate evaluation of
the result?
3. Talk it through with an unaffected party.
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20.  Payment schedules: [Ensure terms are acceptable
and that the department has the ability to comply.]
 Service limitations: [i.e. A network license may be
limited to compay-controlled computers, when what is
really required is a network license that allows remote
access.]
 Length of contract terms: [Changing technology
may make a two-year agreement for database services
with three option years more preferable than a five-
year agreement with less monetary costs.]
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21.  Assistance from
Purchasing and
Distribution Services
 Defining Business
Risks
 Minimizing the Risks
 Departmental
Ownership
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22.  The Principle Issue: Ensure there is a clear
understanding of the two parties’ commitment.
 Ensuring Enforceability:
1. Establish objective measures of performance (did you
get what you wanted?)
2. Create methods to resolve disputes without
affecting progress.
3. Determine means of recourse and remedies, if all
else fails.
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23.  Review from other departments: The Contracts
Office may request a review and/or approval
from other affected departments and additional
University experts.
 Departmental Ownership: As The ‘owner’ of
the contract, the department should take
reasonable steps to secure all departmental
approvals.
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25.  Guidelines for review by the company’s Legal
Office
 Requirements for Review by the company’s
system Office of General Counsel
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26.  Purchase Order vs. Formal Contract
 Incorporating Contractual Terms into POs,
Bids, and RFPs
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27.  Refining the SOS, if necessary
 Matching the Terms to the SOS
 Negotiation
 The Contracts Office will facilitate any required
negotiations with the vendor’s legal office or contract
officers.
 The Contracts Office will maintain continuous
consultation with the department, specifically in the
area of business issues.
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28. Parties Warranties
Effective Date and Terms Remedies
Statement of Service (SOS) Risk Allocation
Pricing Boilerplate
Performance Standards Signatures
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29. Three commonly negotiated/contentious
provisions:
1. Warranties
2. Indemnification [protection against loss or
liability from 3rd party claims]
3. Liability & Damages [legal responsibilities]
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30.  Sovereign Immunity
 Prohibition Against Agency Debt
 Right to Suit
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31.  Governing Law (Jurisdiction) and Venue
 Financial Standing
 Dispute Resolution
 Electronic and Information Resources
Accessibility (EIR Provision)
 Standard Addendum
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33.  Standard or Template Agreements with no
Substantive Changes:
 typically reviewed (redrafted, if necessary) and
comments relayed to the department and/or vendor
within company policy.
 Minor Contracts (approx. 1-5 pages with
relatively high clarity and minor risk):
 typically analyzed, redrafted, and relayed to the
department and/or vendor for review within
company policy.
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34.  Determining the Risk:
Certain agreements, because of value, policies,
or subject matter, can signify potential high
risk to the company.
 Timeline:
The time required to analyze, redraft, and
coordinate issues (and departments) may be
significant, but an initial review will generally
be provided to the department and/or vendor
within company policy.
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35.  Special Procedure Contracts
 Requires review by the UT System Office of General
Counsel (OGC). The Contracts Office will review the
agreement locally and then forward to OGC for
approval as to legal form.
 General Business Contracts > $500,000
 Requires review and approval by OGC. The only
exceptions to this requirement are those contracts
designated by Standard Contracts.
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36.  Timelines
 Special Procedure Contracts and OGC review will
require additional processing time (add an estimated
60-90 days to the normal process).
 Board of Director’s Approval
 Generally speaking, all contracts with a value
exceeding $1M must be approved by the Board.
Again, this is dependant on company policy
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38.  Final Negotiations
with the Vendor
 Departmental
Approval Required
 Additional
Necessary
Approvals
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39.  Upon completion of negotiation, the Contracts
Office will:
1. route the Agreement to obtain appropriate
signatures; and
2. distribute signed copies accordingly.
 For example: President-Delegated Authority:
1. V.P. for Business Affairs
2. Associate V.P. for Administration
3. Associate V.P. for Financial Affairs
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41. If company funds are used, the department
must maintain on file the following
documentation:
1. A cost-benefit analysis for the services, or a
justification of the need for the services; and
2. The relationship of the services to the
staffing plan, if required by the company.
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42.  Upon completion of the procurement process
and contract negotiations, the final phase of
contracting is administration.
 Critical Nature of Administration:
 Regardless of how well a contract is drafted, the
contract will be ineffective if proper contract
administration is not performed.
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43. A Department’s Contract Administration
responsibilities include:
1. Verifying the contractor complies with the
terms and conditions of the agreement;
2. Ensuring all services have been received to
your specification prior to authorizing
payment (or all revenue received); and
3. Ensuring the collection of renewal
documentation (i.e. insurance, bonds).
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44. Departmental Guide for Contract
Administration:
 To ensure compliance, departmental administrators
are strongly encouraged to review the guidelines
found in the company's Department Guide for
Administration of Major Service Contracts.
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45.  Definition of a Contract
 Types of Contracts
 Initial Development and Submission of
Contractual Project
 Overview of Contract Terms
 Time Lines, High-Risks Agreements, and
Special Procedure Contracts
 How to finalize and execute an agreement
 Contract Administration
 Resource information
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