This policy sets out the process in which Henderson State University enters into contractual agreements. This policy specifies the parameters for the creation of contracts with the university, the required administrative and legal review processes and designates who is authorized to sign contracts on behalf of the university.
Definition of a University Contract
For the purposes of this policy, a “university contract” is defined as an agreement between two (2) or more parties, one of which is the university or any of its units, that obligates the university to provide payment, services, goods, or use of university property, facilities, equipment or other resources to a third party. This policy applies to all university faculty and staff employees, students, and student organizations who attempt to enter into any type of agreement that purports to legally obligate the university in any of these ways.
The term “university contract,” as defined in this policy, does not include agreements between different units within Henderson State University.
Examples of university contracts include: agreements for the purchase or rental of goods or services; nondisclosure agreements; agreements that set terms for acceptance for gifts; a loan of university goods; a provision of university services; liability waivers; employment contracts; affiliation agreements; settlement of disputes; licenses; student or faculty exchange agreements; memoranda/letters of understanding or cooperation; contracts with hotels, convention centers or other facilities which require a written agreement; instructional agreements; athletic game guarantees; assignment of the right of a person, group, or agency to use the university’s name, marks or resources; and other contracts that obligate university funds to pay for other services, such as speakers, bands, and entertainment equipment.
The above list is not all-inclusive. While acting in the scope of your employment, if you are entering into an agreement that involves the university or its resources, it is best to presume that you are negotiating a “university contract” and that this policy applies.
All university contracts are required to be in writing, regardless of prior practice or prior business relationships with the person or entity.
Advance Review by Relevant Department(s)
All university contracts should be reviewed and approved in advance by all departments or units that will need to provide technical support, facilities, or personnel to carry out the contract.
Confirmation that Funds are Available and Procurement Processes have been followed
The Responsible Vice President or the Director of Athletics shall confirm that funds are currently available to pay all costs associated with the contract and that all applicable procurement procedures and guidelines have been followed before submission of the contract for review by the General Counsel. Please note that some contracts must be submitted through an additional approval process conducted by the State of Arkansas that is separate and apart from the university’s process that is set out in this policy.
Advance Review by General Counsel
All university contracts must be approved as to legal form and validity by the General Counsel before submission to the authorized official for signature.
The President, Vice Presidents and the Director of Athletics may initiate the review of a university contract by completing and forwarding a Contract Submission and Approval Form with the contract to be reviewed.
More specifically, the Vice President or the Director of Athletics initiating the review of a university contract is responsible for reading the contract entirely and determining that:
- the contract language matches the verbal understanding of all parties and all terms and conditions conform with the final negotiations/agreement of the parties;
- the contract supports the university’s mission and stated priorities;
- the contract does not conflict with any other contracts, promises or obligations of the university;
- the contract is in the best interest of the university;
- (s)he can ensure compliance with the obligations it places on the university;
- there is complete and accurate contact information for the contracting parties including contact persons and individuals who will receive contract notices and service of legal process (i.e. university addresses should include a specific HSU post office box number not just “1100 Henderson Street”);
- all documents referenced in the contract including exhibits, attachments, schedules and appendices are being submitted for review with the contract;
- negotiations are concluded and the document being submitted for review is the final version of the contract;
- the contract is sufficiently clear and internally consistent; and
- the contract and all documents that are referenced in the contract are provided in Microsoft Word format (not in “pdf” format or in hard copy).
The university is an institution of the State of Arkansas. As a result, the State’s “sovereign immunity” protects the university from being a defendant in a lawsuit in Arkansas state courts. However, in order to maintain that protection the university must not agree to certain common contract provisions involving indemnification, insurance, and out-of-state jurisdiction and forum. Also, there are certain contractual clauses to which the university cannot agree pursuant to Arkansas law. Those provisions and clauses include:
- contract terms that continue past the end of an Arkansas biennial budget year unless the contract allows for cancellation by the university upon 30 days written notice
- payment of any penalties including late payment penalties (Late payment penalties are acceptable if the contract specifies that late payment penalties may be incurred only after the payment is 60 days past due.)
- indemnification and defense of the other party (The university may agree to hold the other party harmless in the limited circumstance in which a loss or claim results directly from and is attributable to the university. In that situation the university may only reimburse the other party for an amount limited to the loss solely caused by the university.)
- upon default, to pay all sums due under a contract
- to pay damages, legal expenses, or other costs or expenses for another party
- to agree to litigation in any place other than Clark County, Arkansas
- a requirement that the university have a general liability insurance policy
- the contract being governed or construed by the laws of any state other than Arkansas
- an agreement to arbitrate a dispute
- confidentiality clauses (unless it specifies that the university will disclose documents as required by a court of law or laws including the Arkansas Freedom of Information Act)
The General Counsel will review each contract to determine if:
- it contains any of the prohibited provisions or clauses;
- it is consistent with federal and/or state laws;
- it is consistent with Henderson State University policies and procedures;
- risk management concerns have been reasonably addressed; and
- it is consistent with any predecessor documents that are provided for review.
If the Office of General Counsel receives a contract for review from a university employee other than the President, a Vice President or the Director of Athletics, the contract will be forwarded to the responsible administrator and will not be reviewed until the President, a Vice President or Director of Athletics initiates the review according to this policy.
Departments may develop a standard form contract or letter agreement for particular types of transactions, particular vendors, etc. which may be submitted by the President, responsible Vice President or the Director of Athletics for approval by the General Counsel. If approved, the department may use such form agreements without review of the individual document by the General Counsel, so long as it is used for the type of transaction and/or vendor for which its use has been approved. The responsible Vice President or Director of Athletics should submit its previously approved forms for review every 3 years to promote continuing conformity with legal requirements.
If the General Counsel determines that other university units need to review the contract prior to submission of the contract for signature, the General Counsel will contact the President, responsible Vice President or Director of Athletics to coordinate obtaining the appropriate reviews.
Pursuant to Arkansas Code Annotated 6-66-102, the Henderson State University Board of Trustees is vested with contract authority for the university. The Board of Trustees has delegated the authority to sign most contracts, deed or leases to the President, pursuant to the position’s duties as the chief executive officer of the university.
The President may delegate this authority and responsibility, as described below. No other officer, faculty or staff employee, student, or student organization has the authority to bind or otherwise obligate the university without the express, specific written consent of the President.
Delegation of Contracting Authority
Delegations of contracting authority are prohibited, except where specifically authorized herein. The delegating official retains ultimate responsibility for matters and personnel under his/her supervision. An individual who has not received a written delegation of authority to sign contracts should not sign agreements that purport to bind the university, and may be held personally responsible if s/he attempts to do so. Henderson State University retains the authority not to recognize an agreement as binding against the university unless all signatories to the agreement have proper contracting authority as of the date on which the contract was signed.
All delegations of contracting authority should:
- be in writing
- be made to specific position titles, not named individuals
- indicate the scope of the delegation (i.e., a specific contract/vendor only, contracts under a certain dollar amount, etc.)
- specify the need for advance review by the Office of General Counsel and/or other relevant departments for particular contracts, vendors, or other unique situations different from those generally set out in this policy
- be copied and maintained in the offices of both parties, with a copy sent to the Office of General Counsel. Unless otherwise specified, delegated contracting authority will remain in effect until revoked in writing, with a copy sent to the Office of General Counsel.
Conflict of Interest
University employees are prohibited from initiating or approving contracts from which they will receive a direct personal benefit. University employees with contract authority must exercise that authority in a manner consistent with the laws of the State of Arkansas and rules promulgated by the Arkansas Ethics Commission.
All executed original contracts, including leases and purchase orders, should be promptly provided to the Business Office for purposes of recordkeeping, audit reporting, and execution of disbursements. The university official executing the contract is responsible for keeping a copy of the executed contract, including all attachments, and providing an electronic version of the executed contract to the Office of General Counsel.
EC approved 2016 02 22