This document provides a summary of the law in this area and answers questions frequently asked of attorneys in the Office of General Counsel. However, the information presented here is intended for informational purposes only and nothing in this document should be construed or relied upon as legal advice. The Office of General Counsel or your Campus Legal Counsel should be consulted regarding the specific facts and circumstances associated with any legal matter.
- Does the UW System, as a state agency, have authority to enter this type of agreement/contract consistent with its mission and with applicable laws, regulations, policies and procedures? Is the subject matter new and innovative, something that has not been done at your institution before? If yes, it may require consideration of additional legal/procedural issues. If in doubt, consult with campus or System Legal Counsel. Note: the terms contract and agreement are used interchangeably throughout this checklist to mean the same type of document.
- Make sure the UW System is identified as a proper party. Use: "Board
of Regents of the University of Wisconsin System, University
of Wisconsin – Location, Department of ____________,” Not: “Professor
- Identify the other party by its corporate/partnership/individual name.
- Provide a point of contact for each party (name, mailing address, e-mail, telephone, and fax
- Signature Authority
- Make certain that the person signing on behalf of the Board
of Regents has delegated signature
authority for this type of
agreement by the written institutional
delegation. For example, top administrative
officials may have general signature authority
for all types of agreements, whether they involve ordinary
purchasing, academic/research related agreements or agreements
for international cooperation. Other administrators may have
limited authority to sign only certain types of agreements – for
example, purchases involving certain
dollar amounts or specific products. It
is important to verify whose signature
is required on your specific agreement.
Warning: Signing without the appropriate delegated authority or without obtaining either Board or administrative prior approval, where required, could lead to personal liability for performance of the contract and for damages. See Board of Regent's Policies on Purchasing Authority: 13-1 through 13-4.
The agreement should indicate that the person signing on behalf of the other party has authority to sign as its representative.
- Subject Matter
- The subject matter of the agreement, whether it involves
the purchase of goods and services, academic support, research
opportunities, or international cooperation is clear and
unambiguous as to what is expected and specific in its description
of who does what, when, where, how and
the cost involved.
- Any addenda, further describing the subject matter, have to be labeled properly, identified clearly and consistently throughout, and attached to the agreement.
- Does the contract clearly state any and all per diem expenses or travel expenses? Do the provisions comply with System rules?
- Does the contract contain provisions with regard to place, time,and method of payment?
- Obligations set forth in the agreement should be consistent with all laws, regulations and policies.
- Effective Date & Termination
- The specific (month, day, year) beginning and ending dates
are indicated. If the agreement provides for termination
at any time prior to end of contract:
- Does the agreement allow both parties to terminate? If not, is there a reason why it doesn’t? Are the circumstances allowing termination clearly identified and applicable to both parties? If not, why not?
- Agreement should require advance notice to be given in writing, identify the contact party who should receive the notice and the address to which it should be sent.
- Does the agreement provide for payment to the institution for services performed by the institution up to the date of termination on a pro rata basis?
- Do you want to include a clause proving
that the agreement’s termination
does not affect the rights and obligations
of the part that accrued before termination? If
yes, make sure that the
rights and obligations specified are ones that
your institution wants
to exist beyond the termination of the contract.
Note: The system should reserve the right to cancel any contract in wholeor in part without penalty due to non-appropriation of funds or for failure of the contractor to comply with terms. See PRO-E-7. (For illustrative purposes, references to “PRO-_-_” refer to the State Procurement Manual).
- Length of Agreement
- Do you want the agreement to be renewed or extended?
Contracts may be for any term deemed to be in the best
interests of the State, but the terms and provisions
for renewal or extension must be incorporated in the
bid specifications and original contract document.
Stat. §16.75(3). See: PRO-E-10 for
guidelines on the length of purchasing contracts.
- If renewal/extension is automatic, does the agreement provide for renewal or extension unless notice of non-renewal/extension is given or some particular non-renewal/extension action is taken by a specific date?
- If renewal/extension is not automatic,
it should be accomplished only with
the written mutual consent of both
Note: A contract made in excess of funds available must state that its continuance beyond the limits of funds already available is contingent upon appropriation of necessary funds. Wis. Stat. §16.75(3)
Caution: To avoid inadvertent renewal of an agreement because notice of non-renewal was not timely given, consider a clause that provides for termination unless one or both parties (if only one, it should be the System) give notice of intent to renew.
- Are events that constitute a default/material breach in
performance listed? If they are, they should be clear and
specific and the consequences on the rights and obligations
of the parties identified.
Is there a specific method for providing notice of default/breach? Is there an opportunity to cure? What are the specifics? What time period is allowed for cure?
- Binding arbitration clauses should be stricken. Non-binding arbitration clauses may be permissible. See State of Wisconsin v. P.G. Miron Construction Co., 181 Wis.2d 1045, 512 N.W.2d 499. Consult campus or System Legal Counsel if you are unsuccessful in striking a binding provision.
- Choice of Laws
- The contract should contain language which makes Wisconsin law apply. If the other party refuses to agree to this, suggest striking the entire clause. Consult campus or System Legal Counsel if there are any questions. See PRO-E-7, Standard Terms and Conditions.
- Language should be included requiring claims to be brought in a Wisconsin court of competent jurisdiction. Consult campus or System Legal Counsel if the other party refuses to agree to this provision.
- Required Non-Discrimination Clause
- State contracts must contain a provision prohibiting the contractor from discriminating against its employees or applicants for employment on the basis of age, race, religion, color, handicap, sex, physical condition, developmental disability, sexual orientation, or national origin. Contractors of a certain size are required to have an affirmative action plan. See your grants or contracts specialist if you have any questions. Wis. Stat. §16.765 (1), (2); PRO-E-7, Standard Terms and Conditions.
- Required Apppropriations Clause
- If the contract extends beyond the current appropriation period, it must contain language making continuation of the agreement contingent upon availability of appropriated funds. Wis. Stat. §16.75 (3); PRO- E-10. See contract specialist. This provision applies only when the system is purchasing goods or services not when it is being paid for something.
- Confidentiality and Non-Disclosure Clauses
- The availability of information concerning the contract is subject to disclosure under the open records statute. The existence of the agreement itself can never be confidential. Any confidentiality clause should be tailored to reflect this requirement and drafted narrowly to protect any proprietary interests or trade secrets. PRO-D-23 Consult with campus or System Legal Counsel if you have questions.
- Liability Clauses
Indemnification - By state law, the System cannot agree to indemnify from liability the other party to the agreement. This clause must be eliminated. See Risk Management Policy and Procedure Manual, Part 4.
Hold Harmless - The System can agree to hold harmless the other party but only to the extent that any of the liability, loss, damages, etc. arises out of the negligent act or omission of any employee, officer or agent of the System while acting in the scope of their employment. Risk Management Policy and Procedure Manual, Part 4. Check with campus or System Legal Counsel.
Contracts to Limit Liability - When the System desires to use a contract to limit its own liability when outside parties are using System facilities, contact Office of Risk Management.
- A Certificate of Insurance may be required of the
vendor when the vendor’s services bring an inherent risk of
liability to the System. See PRO-D-34. Contact
Office of Risk Management.
If a vendor requires a System Certificate of Coverage, contact the risk manager at your institution. See Risk Management Policy and Procedure Manual, Part 4.
The State Self-Funded Liability Program protects employees from liability arising out of their negligent acts or omissions if committed while acting within the scope of their authority. See Wis.Stat.§ 895.46. Contact Office of Risk Management.
- Miscellaneous Remedies
- Strike any clause which suggests that the System
agrees to be sued for specific
performance. This remedy
is a form of equitable relief in which a court
orders a party to a contract to perform what that party
has promised to perform. The State cannot be sued
for specific performance because
it is prohibited by Article IV, § 27 of
the Wisconsin Constitution.See
Erikson Oil Products v. DOT, 184 Wis.2d 36, 516 N.W.2d 755 (Ct. App.
Strike any clause which suggests that the prevailing party shall be entitled to recover court costs and attorney’s fees in the event of litigation. The laws that apply to the type of lawsuit that is brought will determine whether a party can recover attorney’s fees and costs. If a party refuses to strike this clause, consult with campus or System Legal Counsel.
Consult campus or System Legal Counsel if other remedies are presented.
- Bond/Surety Requirements
- Sureties may be required from contractors when it is in the best interests of the State. See Wis. Stat.§16.75(5) and PRO-C-19 for guidance. Certain nonresident entertainers and public speakers are required to post a bond with the Department of Revenue for payment of income taxes. A clause addressing this requirement should be included in every public speaker/ entertainment contract. Contact campus and System Legal Counsel.
- Intellectual Property Clause
- For guidance on various intellectual property issues, consult with campus and System Legal Counsel. Review the following: UW System Financial and Administrative Policies: G 10, G27 and G 34.
- Final Caveat
- Don’t be fooled by the name of a document. Whether a document is called an AGREEMENT, A LETTER OF AGREEMENT, A MEMORANDUM OF UNDERSTANDING, A MEMORANDUM OF AGREEMENT, A LETTER OF UNDERSTANDING, A PURCHASE ORDER or any other caption, if it creates legal obligations on the part of the UW System and another party, it is a binding CONTRACT.