University System of New Hampshire
Financial and Administrative Procedures

WHAT'S A CONTRACT?

Procedure: 12-005
Issued By: USNH Senior Contract Officer
Issued Date: 07/01/2005
Revised Date: 03/28/2006

A "contract" is an agreement between two or more entities which creates a legal obligation to do or not do a particular thing. A legally enforceable contract must have (i) a subject, (ii) consideration, and (iii) two or more competent parties.

The subject of a contract defines the terms and conditions of the agreement between the parties, and may be anything legal and permitted by policy.

Consideration is the cause, motive, price, reason, material benefit, right, interest, forgiveness, or whatever it is that is the reason for having an agreement. Each entity must receive some valuable consideration or the transaction is a gift rather than an enforceable agreement. The consideration has to be something one can identify or describe. Typically it is money; however, the consideration may be an acceptance of liability or a promise not to do something one is otherwise entitled to do.

The laws of each state define who is competent to form a contract. Generally, competency requires a minimum age and mental ability to understand the contract. Corporations have the power to enter into contracts, but only by the actions of particular employees who have the power to bind the corporation to a contract. The USNH Board of Trustees is the ultimate competent party to a contract between any USNH institution and another entity. New Hampshire RSA 187-A established the State College and University System. Subsection 187-A:2-a notes that the university system shall be governed by a single board of trustees and subsection 187-A:2-b states that the general court has delegated broad authority to the board of trustees who shall be responsible for managing the university system. In addition, Subsection 187-A:16, Authority of the Trustees, states as follows:

The trustees shall have the management and control of all the property and affairs of the University System of New Hampshire, the University of New Hampshire (including the New Hampshire College of Agriculture and the Mechanic Arts), and all its divisions and departments, the Keene State College, the Plymouth State University, and the university system College for Lifelong Learning.
To allow for business to be conducted in a timely manner, the Board has delegated its authority (USNH Bylaws, Appendix 6) to the Treasurer of the University System of New Hampshire to execute all contracts, leases, grants, deeds, negotiable instruments, and any other legal documents whatsoever on behalf of the USNH and each of its component institutions. In turn, the USNH Treasurer has delegated limited authority to specific administrators at each USNH institution. See USNH Signature Authority Matrix.

Note: some contracts may be oral; others must be written to be enforceable. A court will enforce the terms of a written contract and will generally not consider prior oral agreements that conflict with the written terms. USNH employees are strongly encouraged to ensure that all contracts are committed to writing.

Examples of contracts include agreements for the purchase or rental of goods and services; non-disclosure agreements; agreements that set terms or restrictions on the acceptance of "gifts"; a sale or lease of USNH goods or services; liability waivers, settlement of disputes; licenses, student or faculty exchange agreements; memoranda of understanding or cooperation; hotel reservations that require a written agreement (e.g., conferences, meetings, etc.); the right to use USNH's name or the name of a USNH institution. The concept of a "contract" is quite broad. To be on the safe side, one should assume that any agreement or understanding with another party could be a contract.

For a list and definitions of the basic contract formats used throughout USNH, see Procedure 12-006 for Purchasing Contracts and Procedure 12-007 for Non-Purchasing Contracts.

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