Supplier Contracts and Agreements
The Broader Public Sector Procurement Directive provides the following definition of a contract:
An obligation, such as an accepted offer, between competent parties upon a legal consideration, to do or abstain from doing some act. It is essential to the creation of a contract that the parties intend that their agreement shall have legal consequences and be legally enforceable.
The essential elements of a contract include:
- an offer
- an acceptance
- an intention to create a legal relationship
- consideration (usually money)
If a document contains these elements, a binding contract between the parties is formed. A contract that is too vague may not be enforceable, so it is important to ensure that business terms included in the contract are specific and described in detail.
Contract Signing Authority
- Divisions generally have the authority to approve and sign contracts, including those for the purchase of goods and services, that are in the normal course of business and that adhere to University policy and procedures.
- Almost all academic University divisions have their own established guidelines describing the individual positions (ie: Dean, Chair) that have the authority to sign contracts.
- The Governing Council of the University of Toronto should be used as the legal entity name when drafting contracts.
- Signing authority across divisions may vary. Speak to your Chief Administrative Officer (CAO) if you are unsure about who within your own division should approve and sign a contract.
- Some potential contracts may fall outside the normal course of business for approval and signature at the divisional level. For contracts arising out of academic divisions that fall outside the normal course of business, the Provost’s approval is required.
- It is important that at the highest level within an academic division (for example, Dean or Chief Administrative Officer), there is support and approval of the contract conceptually before submitting the contract for the Provost to approve.
For information about what the Normal Course of Business means and when the Provost approves a contract, refer to the Provostial Guideline for Academic Divisions on Contracts.
Contracts below $100,000
Supplier agrees to be bound by the Standard Terms and Conditions of the University of Toronto which are incorporated herein by reference and can be viewed at www.procurement.utoronto.ca, unless Supplier and the University of Toronto have entered into an agreement that expressly provides otherwise.
The terms and conditions will create a legal obligation upon the supplier’s fulfilment of the purchase order.
Sometimes, suppliers may provide their standard form of contract for the University to execute, in which case, the contract will take precedence over the terms and conditions. These contracts may be signed if they align with the University’s standard terms and conditions and also include a start and end date. These contracts do not always include the University’s standard terms and conditions because the contract has been drafted for the supplier’s benefit and the University’s standard terms heavily favour the University. Therefore, supplier contracts should be reviewed carefully by the local buying unit. Some key terms that should be considered and included in a contract for the purchase of goods and services include:
- Insurance and Warranty provisions, if applicable
- Ownership of Intellectual Property that is created for the University, if applicable
- Confidentiality provisions
- Specific deliverables
- Timelines expected for the deliverable(s)
- Payment schedule associated with the deliverable(s)
- Termination Clause
- Laws of Ontario will govern the contract
- Date and signature of both parties (who have the authority to bind the legal entity)
Contracts at $100,000+
Often, the supplier wishes to negotiate a number of modifications to the contract template for various legal and business reasons. Procurement Services, in conjunction with the local buying unit may determine if the supplier’s suggested modifications requires a more detailed legal review.
Requests for major changes to the standard contract will delay contract execution because the negotiation and approval process for both the University and the supplier can take a great deal of time.