Contract Review Overview

 

All contracts must be submitted for review by Legal (Assistant General Counsel) via COLT (WMU’s Contract Organization and Lifecycle Tool). Go to https://go.wmich.edu/s/article/COLT-overview-login-and-access to get started.  See the Microsoft Team called COLT–Users for step-by-step directions, FAQs, a glossary and other important helpful documents. When you receive access to COLT, you will automatically be added to this team. 

To request access, contact michele.cole@wmich.edu .

 

Contract definition

A contract is a written agreement between WMU and a non-WMU business or entity which includes mutual promises and obligations that are intended to be enforceable by law. There are financial, legal, and other types of risk associated with most contracts.  Be aware that the value of a purchase does not correlate to the amount of risk a contract contains.

  • Rule of Thumb: any document with terms and conditions is a “contract.”
    • Examples:  A contract goes by many names – agreement, contract, non-disclosure agreement, affiliation agreement, memorandum of understanding (MOU), purchase order, end-user licensing agreement (EULA), service agreement, scope of work (SOW), click-through agreement and many more. 

Not every WMU contract requires legal review, but most contracts need to be submitted in COLT for signature and for storage. COLT is a searchable repository for WMU contracts; it provides history and reports for decision making.

With the exception of the WMU Foundation, all contracts should be in the name of the “Board of Trustees of Western Michigan University on behalf of the University Department”.

 

3 Major steps - review, approval and signature authority

Review: Contracts require legal and insurance review at a minimum. Depending on the scope of work, value and other factors, the contract may need review from other departments on campus as well.  See specifics further down in this document or refer to the Step by step user guide .docx.

WMU templates (https://wmich.edu/legal/contracts/agreements) written by in-house attorneys do not need legal review unless legal language is changed. Always use the templates on the Office of Legal Affairs, Risk and Compliance (OLARC) website as they can change without notification.  Do not save them to your desktop or other personal drive.  

Approval: A final approval is used to ensure all steps were followed during the review round. The approver is designated behind the scenes depending on the type of contract submitted.

Signature authority:  No employee has the authority to sign any contract unless specifically authorized by the VP of Business and Finance even if authority to sign other documents is allowed.  See WMU Signature Authority Policy.  Authorized signatories are listed here. 

  • Typically, purchases of goods or services require a signature from the Sr. Director, Risk Management and Compliance; VP of Business and Finance; or the Associate VP of Business and Finance.  Academic agreements are signed by the Senior Vice Provost for Academic Affairs, Budget and Operations; Provost; or President.

« Warning:  If you sign a WMU contract without Authority and/or without following these review and approval procedures, YOU may be personally liable for the contract and/or subject to discipline.

 

Before you submit

  • Read the contract carefully: Whether it’s a WMU template or the vendor’s contract, be sure to understand the contract and verify the scope of work, order, cost and terms are acceptable and correct. 
    • Gather all documents associated with the purchase, such as past contracts, purchasing forms, internal approvals (OIT product review, export control, emails, etc.), any and all documents that can assist the reviewers and future employees in need of history for the purchase.  These should be uploaded as attachments in COLT.  To aid in the review, the contract should be submitted in MS Word format. The contract should include attachments, addenda, cross-referenced documents, and ALL the documents/policies/webpages hyper-linked in any contract document.
    • Make appropriate edits, using “Track Changes” in MS Word, before uploading it to COLT. 
  • Build in lead time!  Plan ahead!  Be sure to submit the contract documents as early as possible so ALL the mandatory reviewers have time to review contract documentation, to ask questions and get answers from you and the vendor, to negotiate changes, and to provide the necessary approvals BEFORE the work begins or products are shipped. 

Work must not begin before the contract is signed by both WMU and the vendor. If work does commence before that, you (individually) and/or your department may be responsible for any and all legal action or penalties. 

  • Prepare to negotiate with vendor:  You are responsible for negotiating with the vendor regarding any WMU-requested / required changes.  Use COLT’s external review round to keep all negotiations available with the contract.   

 

Red flags - contract language/provisions can be risky

The following are terms for which contract reviewers always look. Negotiating these items with the vendor before you submit to COLT can make the review process quicker.

Arbitration:  If the contract has wording about Mandatory or Binding Arbitration, the language must be reviewed by Legal to avoid unwanted legal requirements. 

Attorney fees, litigation costs:  If the contract states that WMU will be responsible for / pay the Vendor’s litigation costs, the language must be reviewed by Legal and will likely need to be deleted or amended so as to favor WMU.

Confidentiality: If the contract requires WMU to maintain confidentiality, the contract must be reviewed by Legal to protect the University. 

  • FOIA, legally required disclosures.  As a state university, WMU is a public entity subject to Michigan’s Freedom of Information Act (FOIA) and may be required by law to disclose certain information, including its contracts and related information.  WMU needs to disclose that rule to the other party.

Conflict of interest: If the contract involves a potential conflict of interest (e.g., a university employee buying/selling something in which they or a family member have a financial interest), it must be reviewed by Legal to ascertain appropriateness.

Governing law and jurisdiction, venue:  If the contract mentions governing law, jurisdiction, or venue, it must be reviewed by Legal UNLESS it states the contract is governed by Michigan law and that a lawsuit will be brought in Michigan’s courts.  It is in the best interest of WMU to litigate in Michigan where our attorneys are licensed.  When the vendor refuses to make the change to Michigan, the department will be responsible for the costs associated with any outside legal representation in the event of a breach.

Hold harmless, indemnity: If the contract states WMU will indemnify or “hold harmless” the other party, the language must be reviewed by Legal and may need to be deleted or amended. [NOTE: WMU can usually agree to indemnification that is mutual (both sides indemnify each other equally) If the contract section also includes this language: “To the extent permitted by law and without waiving governmental immunity…”]

  • An indemnity clause states which party to a contract is responsible for injuries or damages arising from the contract.  An unfavorable indemnity clause could mean WMU is responsible for losses caused by the other party, and WMU incurs legal fees defending lawsuits that should have been the vendor’s responsibility.

Insurance: If a vendor’s contract requires insurance limits, levels, policies, or additional insureds that either party must carry, the contract must be reviewed by Risk Management. Risk Management may also require the vendor to carry insurance even if not mentioned in the contract. A Certificate of Insurance (COI) will be requested and saved in COLT.

Intellectual property (IP): If the contract mentions intellectual property rights, the contract must be reviewed by Legal to protect the University’s IP. 

WMU’S name, logo, seal, symbol, marks:  If the contract states the desire to use WMU’s name, seal, trademarks, service marks, trade names, logos, domain names, or other indicia of source, association, or sponsorship in any advertising, marketing, or publicity you must get written permission from WMU’s Office of Marketing and Strategic Communications (Kim Nelson).

Termination for convenience: When possible and favorable, contracts should include language stating that WMU can terminate the contract at any time and for any reason.  This is not required language, but it is a means that would assist WMU terminating unfavorable contracts without waiting until the contract term expires. If adding this language negatively affects other conditions of the contract, it may not be favorable to negotiate the wording.

Term: While not a true “red flag,” be very aware of the term and how long the contract will be in effect.  It is WMU’s practice to limit all agreements to a term of five years or less.  If the vendor will not agree to this five-year limit, the contract must be re-submitted in COLT for re-review every five years to verify legal language and insurance is still acceptable.

 

Specific review requirements for particular types of contracts

Affiliation agreements (AA)

Definition: A written agreement between a student and university department with an outside entity (Host Site) to train and give practical experience required for graduation. These courses may be called internships, practicums or clinicals. The contract details the legal obligations of both parties and must be signed before the experience may begin.

Review:  If the Host Site agrees to use WMU’s template, no Legal or Risk Management review is required. Otherwise, follow standard COLT procedures. Template affiliation agreements

Signature: Affiliation Agreements are signed by the 1-2) WMU Dean and/or Chair (based on each college rule) of academic program and 3) the Sr. Vice Provost for Academic Affairs, Budget and Operations.

Confidentiality, Non-disclosure agreement (NDA)

Definition: A Confidentiality Agreement, often called an NDA, is a legal contract that governs the exchange of proprietary or confidential information between WMU and a non-WMU person or entity.  An NDA is commonly used when the parties are considering a relationship/collaboration with each other for business, academic or research purposes.  The parties need to share information to understand one another's processes, methods, or technology in order to evaluate their potential future relationship, but the other party must agree not to disclose that information, and to protect it from additional uses and/or being disclosed to others. 

Review:  If the other party agrees to use WMU’s template, no Legal or Risk Management review is required. Otherwise, follow standard COLT procedures. NDA agreement template

Signature:  NDAs must be signed by:

  1. the WMU employee receiving and managing the confidential information, and
  2. WMU Authorized Signatory with authority to sign NDAs on behalf of WMU. Grants and Contracts NDAs are to be signed by the VP for Research and Innovation.  All other NDAs are signed by the VP for Business and Finance, the Associate VP for Business and Finance, or the Senior Director of Risk Management & Business Services.

Information technology (IT) purchases

It is crucial to be sure software, apps, websites, and all other IT purchases are reviewed by WMU’s IT Planning and Compliance Review to keep WMU safe from malware, phishing and any potential cyber threats which may be detrimental to the IT infrastructure and University confidential data. The process also ensures that the appropriate planning and implementation steps are followed and coordinated with WMU IT professionals.  Donations of IT products/services with zero monetary cost are included in this process. See the IT technology purchase policy for more specific product requirements.

Click-through agreements

Any website that requires you to click “I accept” or “I agree” before you can use, purchase, or license its goods or services IS A CONTRACT, and clicking I agree/accept is the legal equivalent of signing your name. Thus, if you click without written permission from an Authorized WMU Signatory and without IT Planning and Compliance Review, you may be personally liable for the cost of the goods/services and anything that causes WMU harm as a result of your click including court costs, attorney fees and settlement/damages.  Treat these click-through agreements just like any other contract. Copy the terms and conditions to a MS Word document and submit to COLT.

 

Other mandatory reviewers

A contract may also need to be reviewed by other WMU Departments (procedure details in COLT guide):

  • IT product or service: OIT must verify Planning and Compliance Review was approved and completed.
  • Contracts over $5,000:  Purchasing must verify appropriate paperwork has been completed.
  • Insurance: Some vendors require WMU to carry insurance, alternatively, WMU’s Risk Manager may require the vendor carry various insurance depending on the type of purchase and risk associated with it.
  • E-Commerce or PCI: The PCI Committee must approve all systems that process credit cards to comply with Payment Card Industry Data Security Standards. 
  • Foreign vendor: 
    • WMU’s Export Control Officer is responsible for protecting the University from negative foreign influence. The Officer will verify the purchase does not conflict with federal rules and regulations.
    • Corporate Reporting and Taxation must review for foreign tax issues and that the appropriate required forms are completed.
  • WMU’s name, logo, seal, symbol: The use of these by a vendor must be approved by Marketing and Strategic Communications.

 

Contract management

COLT assists to manage contracts, enabling WMU Departments to keep track of WMU and vendor obligations under each executed contract.  Having this information readily accessible will help WMU Departments build good working relationships with vendors. WMU has no legal obligation to continue working with a vendor that does not fulfill its duties under the contract or performs unsatisfactorily.  Carefully managing WMU’s contracts can help avoid missed savings, unwanted extensions, costly litigation, and broken relationships.

Once a contract has been signed, you/your department should assign a contract administrator to oversee it.  The Contract Administrator should perform the following tasks:

  • Notify
    • Be WMU’s point of contact for the contract;
    • Be knowledgeable about the contract’s specifications and terms;
    • Manage renewals, changes or updates to the contract and notify stakeholders.
  • Monitor
    • Establish goals for performance under the contract;
    • Monitor for unacceptable performance by WMU or the vendor;
    • Hold regular meetings with stakeholders and/or the vendor to review and discuss performance. 
  • Resolve
    • Keep records of any disputes and/or resolution;
    • Develop, document, and address action items as necessary.