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Basic Contracting Guidelines

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Recitals   
 
General Drafting Tips

Always start with the appropriate standard or company universal agreement. Never offer one company's agreement to another company as a first draft.

  • Tell this to your investigators.
  • If you will have to work from the company's agreement form, use our standard clauses and checklists to evaluate the company's proposal.

Carefully consider who the parties are, who should sign for each, and be sure that the obligations undertaken in the agreement are consistent with the ability of the parties to fulfill them.

  • PI's are not parties to the agreement, so they should not be referred to as though they were. If a Sponsor is particularly troubled by this, offer language like the following:

    "Institution represents that the Principal Investigator and all other investigators may perform services hereunder are its employees and shall abide by the terms and conditions of this Agreement as if each were a party hereto."
  • Third party agreements pose several problems with respect to who signs them and who is obligated by them. The parties to an agreement cannot bind a third party to do anything.

Be consistent throughout the agreement with defined terms, outline levels, and incorporation of clauses from other agreements. Always conform "borrowed" terms to your agreement's definitions.

 Remove any paragraphs that are not relevant to your transaction.

 Avoid implied provisions - make them explicit instead.

  • Example: If Sponsor only agrees to pay patent costs with respect to jointly owned inventions, it is implied that Sponsor will not pay such costs with respect to University solely owned inventions. Make it clear that we expect both.
  • Example: "If Institution has not received Sponsor's comments within sixty (60) days, it is agreed that approval for publication is granted." This implies that Sponsor could withhold approval for publication. Make it clear that we must have final editorial control over publications and Sponsor has no right to withhold consent or approval.

Avoid repetition - do not say the same thing or address the same issues in two different places.

 Avoid pronouns - use the parties' names or defined terms as references rather than pronouns (him, his, it, its, them, their) unless the party to whom a pronoun refers is clear from the context.

Recitals

Recitals are very valuable, especially with an unusual deal. They set the stage and fill in background information.

Drafting hint: Imagine that you are someone unrelated to and with no knowledge of the deal, and that you are charged with making sense of the transaction two years later. Write the recitals (and indeed, the whole agreement) so that a person could read them one time and understand the reason for the contract and what it is going to do.

 
Disclaimer: The materials on this website do not constitute legal advice. You should consult with an attorney before acting on or conveying any interpretation of these materials.