For detailed information, please contact the General Counsel’s office.
What is a contract?
A contract is a promise that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty. Contracts arise when a duty comes into existence, because a promise is made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract. Generally, the law of contract involves commercial transactions where money or goods are changing hands. The law looks for two things:
- Offer and Acceptance
Offer and Acceptance – The question of offer and acceptance determines whether the parties to a contract were ever “of one mind” as to the terms of the contract. There must be a moment when one party makes an offer and the other says “Yes.” Not, “Yes, but….” Just a plain, simple, clear, unequivocal “Yes.” Anything else is a refusal or a counter offer.
Consideration – Consideration is the value that must flow each way for a contract to be enforceable. For example, if I promise to give you my car without your promise of payment or some other thing of value, the law will not force me to follow through on my promise. There must be something of value flowing each way.
That value can be cash on the spot, a promise to pay at some time in the future, the car, the promise to deliver the car to you next week, or the like. In other words, the value can be immediate or postponed. The law does not care particularly about the timing.
Without clear offer and acceptance, and the mutual flow of value, there is no contract, that is, there is no promise that the law will enforce. Of course, there are wrinkles in the way in which the law will infer those elements. Why else would contracts be a year long course in law school? But, for practical purposes, as long as you make sure that your contracts have clear, unequivocal offer, acceptance and consideration, your contracts should be good to go.
Steps to Determine the Type of Contract Required
Contracts at KSU are usually initiated when a University employee identifies the need to do business with a party, including vendors of goods and services; other governmental departments or agencies or even a foreign nation or organization. The first step in making the contract come together is usually to determine whether the transaction is one for acquisition of goods and services by the University; sales or other performance by the University; or some other kind of Agreement.
Sometimes, it is difficult to determine what kind of contract is required for the transaction. Some contracts may involve both acquisitions of goods and services, or may involve both acquisition and revenue-generating activities. Most of the time, you can determine which type of contract is required by answering the following questions:
- Is the purpose of the contract to obtain personal services from another? Is your department conducting a workshop for the faculty? If so, it is likely a Personal Service Contract.
- Is the primary purpose of the contract to secure the services of an entertainer or group of entertainers? Then most likely you will use their contract with our standard addendum attached.
- Is the activity for which the contract is needed one that involves hiring a speaker? This may require an Event Speaker Agreement.
- Are you creating or renewing an Agreement involving an educational institution or other organization for a cooperative program? The likely form of contract will be a Clinical Placement Agreement or Affiliation Agreement.
- Contact the Office of University Counsel for assistance before signing or entering an agreement on behalf of the University or yourself as a representative of the University.
Depending upon the type of contract or agreement, certain conditions must be met and routed for approvals. Notify the appropriate supervisor and route through the University Counsel for final confirmation.
- Clinical Placement/Affiliation Agreements
- Artist/Entertainer Agreements
- Event Speaker Agreements
- Memorandum of Agreement
- Personal Service Contract
Common Contractual Errors
- Initialing of Changes. All changes, whether, written, whited-out, or added on a separate piece of paper, must be initialed by all parties to the contract.
- Terms. All terms must be clearly defined to avoid any confusion should a matter be brought before a judge. For example, many contracts contain the term “travel expenses”. However, absent a definition, this can include the more expensive, first class airfare, which the college never intended.
- Unacceptable terms. All terms not acceptable to the Commonwealth must be stricken and initialed. Please read the fine print of all contracts provided by outside contractors for our use. Common unacceptable language present in these documents includes alternative jurisdiction in cases of dispute, insurance provisions and indemnification provisions.
- Striking language. A broad X over inapplicable language may create questions as to what is excluded in a contract.
- Missing Signatures. Contracts must have both parties signatures in order to be completely executed.
- Marking Attachments. Ensure that contract attachments are not misnumbered and/or mismarked.
- Unilateral Additions. At no time may a contract be modified without the explicit consent of both parties. Missing paperwork, which is subsequently added, should by approved by the party prior to resending the document to University Counsel for legal review.
What Governs Contracts at the University?
- Federal and State Laws
- Kentucky Revised Statue 45A
- Kentucky Revised Statue 164 and 164A
- HIPAA, FERPA and more