Procedure for Contract Review and Approval at Henry Ford College
This procedure is designed to help College staff negotiate, prepare, and maintain legal and effective contracts. Every individual participating in College contracting should be familiar with this procedure and the College’s purchasing policies and procedures. This procedure is not exhaustive, but offers advice on frequently encountered contract terms and a general overview of the contracting procedures. Compliance with this procedure may not be sufficient to comply with all requirements of law, and does not ensure that a contract is in the best interests of the College, or that funding is available for the contract. Please utilize the proper contract review procedures to assist in compliance. All contracts involving software or IT services must be approved by the Vice President of Strategy and Information Services prior to Legal review. If you have any questions regarding contracts or this procedure, please contact Legal Services.
I. The Basic Requirements for All Henry Ford College Contracts
This section provides an overview of the specific rules that apply to Henry Ford College contracts including required and prohibited contract terms. Please note that a “Memorandum of Understanding or MOU” is in fact a contract and should be treated as one. Legal Services has available a pre-approved form MOU for certain matters if the College is generating the contract. If the other party has originated the contract and the necessary changes are significant, offering a pre-approved template may simplify and expedite the process.
A. The Contracting Parties
In all contracts, the contracting party for the College is “Henry Ford College.” The contract may also reference a specific department for example: Henry Ford College School of Nursing. Typically, this clause would be followed by a parenthetical, short form of the name for use in the rest of the contract, e.g., (hereinafter referred to “HFC” or “the College”).
If the other party is a corporation, organization or other legal entity, be sure that the title includes the correct, full legal name and a reference to its state of incorporation and/or its principal place of business. For example: “ABC Corporation, duly incorporated under the laws of the State of Michigan.” Or: “ABC, Ltd., with its principal place of business at 5120 ABC Drive, Dearborn, MI 48128”
B. Basic Terms and Conditions
All contracts must contain the basic information necessary to understand the intent and agreement of the parties. These include:
a. The names of the parties;
b. The dates, or term of the contract, including any automatic renewal provisions of the agreement (The College does not generally agree to “automatic renewal” terms nor does the College generally agree to a term longer than 3-5 years);
c. The responsibilities and obligations of each of the parties’;
d. The terms (who, when, and how) of payment, if any;
e. The procedure of termination of the agreement (e.g., 90 days notice or for defined cause); and
f. A signature line and date for the individuals authorized to execute the agreement (i.e. only the President or a Vice President of the College have authorization to sign and commit the College to a contract).
C. Prohibited Terms
a. Indemnification/Hold Harmless: In general, the College cannot indemnify or “hold harmless” the other party to a contract. Every effort should be made to delete such provisions for proposed contracts. The following language should be used for Indemnity paragraph:
Each party shall be responsible for its own acts and the results thereof and shall not be responsible for the acts of the other party and the results thereof. Each party, therefore, agrees, to the extent authorized by applicable state or federal statute, that it shall assume all risk and liability to itself, its respective board members, officers, employees, or agents from any and all claims, demands, judgments and expenses, including attorney fees, from any and all loss, damage, or injury, to person or property, or death arising from any negligent action or omission by itself or its own agents related to (a) the Agreement, (b) the activities authorized by this Agreement, or (c) the use or occupancy of the premises, project area, or facilities that are the subject of this Agreement.
b. Insurance: With respect to insurance coverage, the College is limited to the coverage it maintains through the College’s insurance carrier. Contract provisions calling for College to carry specific types or amounts of insurance or requiring the College to provide a Certificate of Insurance may be in conflict with the College’s coverage. You must contact the Office of Financial Services to determine whether the insurance coverage maintained by the College meets the contractual requirement. If not, it must be either changed or deleted. If the contract calls for the College to name the other party as an “additional insured” you must advise the Chief Financial Officer of the College of this requirement and receive approval for the provision.
When a contract calls for activities that will occur on College property or when the College is conducting activities on another party’s property, it is highly advisable to insert a contract provision requiring the other party to provide the College with a Certificate of Insurance showing liability insurance of at least $1,000,000 and which names the College, its Board of Trustees, individual trustees, in their personal and professional capacities, employees, and agents as additional insureds. When the activity includes use of motor vehicles, the certificate should include appropriate automobile insurance. The certificate should also include 30 days notification to the College in the event the insurance policy is cancelled.
c. Taxes: As a state institution, the College is not subject to sales tax and should not agree to pay sales tax.
d. Disclaimer of Warranties: While not prohibited by law, as a best practice, the College will not generally allow another party to disclaim warranties.
e. Choice of Law (Governing Law)/Jurisdiction/Venue: Any provision that calls for the application of law of some other state or requires the College to submit to the jurisdiction of a court other than in the State of Michigan, must be deleted or replaced with “State of Michigan” or “Circuit Court within Wayne County, Michigan”.
f. Arbitration/Mediation: Any provision that requires the parties to submit any dispute regarding the contract to a third party or a panel to settle the dispute must be approved by the Vice President and Legal Department. The following language should be used for an Arbitration/Mediation paragraph:
The Parties agree to attempt best efforts to resolve disputes on an informal basis through meetings and discussions. Disputes that are not resolved at the informal level shall be submitted to facilitation. If facilitation is unsuccessful, the Parties shall submit their dispute to binding arbitration in lieu of litigation and waive the right to file suit against the other. The arbitration shall be conducted in Dearborn, Michigan by a mutually acceptable arbitrator who shall determine which Party(ies) shall be responsible for paying the arbitrator’s fee.
g. Confidentiality: Some contracts may have a confidentiality or nondisclosure clause as to some specific information. Any such “nondisclosure” clauses must include an exception permitting disclosure “as required by law.” If you have any questions regarding the terms of a confidentiality or nondisclosure provision, please contact the Office of Legal Services.
h. Liquidated Damages: Liquidated damage provisions will generally not be approved as they require the College to pay for goods or services not actually rendered. Any provision which requires the College to pay for liquidated damages must be specifically approved by the Vice President and Office of Legal Services.
i. Procurement Language: Prior to the execution of any contract for e-learning and information technology products or services, all contractors shall provide written confirmation that their products and services meet without limitation the accessibility standards and guidelines of Section 508 of the Rehabilitation Act of 1973p and/or the Web Content Accessibility Guidelines (WCAG) 2.0 and W3C Guidelines, Voluntary Product Accessibility Test, as applicable. Please consult with the College’s Web Accessibility Coordinator and IT. All contracts shall, as reasonably possible, include such representations by the contractor and include a continuing obligation by the contractor to meet all applicable accessibility standards and guidelines which may be developed over time and adopted by the College and/or imposed by law or regulations. The following should be added:
All e-learning and information technology purchased, upgraded or renewed by or for the use of Henry Ford College shall comply with all applicable College policies, Federal and State laws and regulations, including, but not limited to, Section 504 of the Rehabilitation Act of 1973, 29 USC Sec. 794 and Title II of the Americans with Disability Act of 1990, 42 USC Sec. 12131 et seq.
D. Required Terms
For supplier-generated contracts, the College may want to consider requesting an Addendum to the contract instead of altering the supplier’s standard contract. The Addendum should include the following terms:
• Drug Free Workplace
• Accessibility Standards
• Reference to College Policies
Other required terms include the following when applicable.
Student or Financial Records: If the terms of the contract call for access to the College’s computing systems, student records, financial records regarding students (or their parents), or financial information regarding College employees, provisions will need to be included to protect such information and to establish the other party’s obligations to protect such information. Require compliance with all applicable laws and regulations such as, but not limited to, FERPA, HIPAA, etc.
Independent Contractor: Service contracts should include a statement that the contractor/vendor is an independent contractor and not an employee, and that the parties understand and intend such a relationship. As a best practice, the statement should indicate that the contractor/vendor, not the employer, controls how to accomplish the project and that the contractor/vendor supplies all tools and equipment.
Termination Clause: The College should be able to terminate the contract in case of default, threatened nonperformance, subcontractor default, violation of law, financial instability, failure to retain certification. If the other party will accept, the following language should be included:
Either party may terminate this agreement at any time without cause by notifying the other party in writing thirty (30) days in advance.
II. Contract Review and Approval Procedures
This section covers the proper process for contract review, contract signature and document retention.
A. Steps that Originating Department Must Do
- Read the contract
Evaluate the viability of the contract
a. Ensure that the contract accurately reflects the agreement of the parties
b. Evaluate whether the contract is in the best interest of the Department and the College
c. Evaluate whether the department can uphold its contractual obligations
Check for compliance with Basic Requirements for Henry Ford College Contracts (See Section I above)
- Obtain Authorized Review (See Section B below – Authority to Review)
- Obtain Authorized Signature (See Section C below – Authority for Signature) – After final review, obtain signature of the authorized individual(s) at the College. Remember, only the President or a Vice President or designees may sign a contract on behalf of the College.
- Obtain signature of other party
- Ensure that the designed department/office retains a copy of the executed contract and send a copy to Legal Services for their files.
B. Authority to Review
Many contracts or agreements will originate at the department level, yet nearly all require additional review prior to signature by an individual authorized to obligate the College. The Request for Contract Review form (attached as Exhibit A) must accompany the contract as it is routed to the appropriate person for further review. Failure to attach a completed Request for Contract Review form will result in the contract being returned to the originating department. ** This Request for Contract Review requires a summary of the contract terms. The form requires assurances that the departmental representative 1) has read the contract in its entirety, 2) is satisfied with its description of the goods and services to be provided to the College, and 3) is satisfied with the description of the College’s obligations. **The individual(s) responsible for reviewing a given agreement depends on the type of contract at issue.
Review by Legal Counsel will be the last step and should be routed to Legal Counsel only after the above steps have been taken. Please make sure that the contract is in Word format so that Legal may redline any changes. Please also make sure that any Exhibits or attachments mentioned in the contract are also attached for Legal review. Please allow at least 10 working days for Legal review of standard contracts. If a contract is complex, additional time may be required for review. If the contract needs Board approval due to the amount of money at issue, please get Board approval prior to finalizing the review process. After final review and revisions, the signature authority may sign the contract.
C. Authority for Signature/Final Approval
Generally, only the President or a Vice President/designee have the authority to sign a contract that financially binds the College. No other individual have authority to enter into a contract obligating Henry Ford College to payment in excess of $1,000 or otherwise obligate Henry Ford College, without one of the following:
• A resolution of authorization from the Board of Trustees; or
• A written delegation of authority from the President or Vice Presidents as noted within the individual’s job description or personnel file; or
• A purchase order or other contract instrument issued by or under the direction of the Purchasing Director, with prior approval of the appropriate Vice President.
Failure to ensure that the appropriate signature authority is obtained may result in personal liability for the employee(s) involved in the transaction. Questions regarding signature authority should be directed to the President or responsible Vice President for your area. Should a contract be signed by an unauthorized employee of the College, said employee may be disciplined, up to and including termination, in accordance with any applicable collective bargaining agreement.
HFC Board of Trustees' approval is required for certain contracts. It is the responsibility of the President or Vice President to make that determination.
D. Procuring Vendor Signatures
If, after obtaining the authorized signature on behalf of the College, the other party has not yet signed the agreement, a reviewing or signatory authority must ensure that the other party signs the agreement and returns the executed agreement to the College for retention.
E. Retention of Executed Agreements
Once the document has been properly executed (authorized signatures from both parties) a copy of the agreement should be sent to the originating department. The original must be returned to the Office responsible for retaining the executed agreement with a copy of the executed agreement also sent to Legal Services.
This Procedure supersedes and replaces any and all procedures related to this subject
The information contained in this Procedure contains information about legal issues and is not intended to be legal advice and in no way should it be construed as legal advice. You should contact the College’s attorney for specific legal problems or questions relative to any contract.