S R A I N T E R N A T I O N A L

2 0 1 5 D E L A W A R E V A L L E Y C H A P T E R M E E T I N G

J U N E 8 , 2 0 1 5

Basic Legal Principals for Contract Administrators

P r e s e n t e r s :

C a r o l y n K e n d a l l P o e r i o , C R A

G r a n t M a n g e r , U n i v e r s i t y o f P e n n s y l v a n i a G r a d u a t e S c h o o l o f E d u c a t i o n

A d a m R i f k i n d , E s q .

A s s o c i a t e D i r e c t o r , U n i v e r s i t y o f P e n n s y l v a n i a

O f f i c e o f R e s e a r c h S e r v i c e s

©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

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Learning Objectives

Understand the basic legal principles of contracts and the importance of proper drafting.

Effectively determine the appropriate agreement type for a situation.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Key Points

Explain basic legal concepts about contracts and agreements;

Advise on good drafting techniques;

Describe different kinds of contracts and agreements;

Give insight into the perspectives of various kinds of parties with which a university will contract for research.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

What is a Contract?

“The writing which contains the agreement of parties, with the terms and conditions, and which serves as a proof of the obligation”

-Black’s Law Dictionary, 4th Edition, West Publishing Co.: St. Paul, MN, 1951

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Basic Concepts: Why use contracts?

(1) to memorialize the agreement of parties, so they may refer back to the contract to ensure proper performance of their respective obligations; and

(2) to provide a neutral third party, such as a judge or mediator, with a document to interpret, in order to determine the intent of the parties.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Parol EvidenceDOES NOT COUNT

Basic Concepts: Four corners

Interpretation of a contract is limited to the language in the contract.

Statements outside of the agreement are “parol evidence” and generally will not be considered by a court interpreting the contract. Only terms in the contract are enforceable.

Pitfalls: “My program officer said…”, “That’s clarified in an email…”

Counts!

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting: Entire contract

An integration clause provides that the agreement is the sole expression of the intent of the parties, and supersedes any previous writings or expressions. It reinforces the parol evidence rule that only terms in the contract will be enforced.

Sample clause: “This Agreement embodies the entire understanding between the parties relating to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral.”

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting Tips

Use clear and unambiguous language

Use simple sentence structures. Limit a sentence to one or two subordinate clauses.

Avoid passive voice. University will be invoiced.

Subrecipient will invoice.

Provisions should be a definite as possible. Example: In a payment clause, there should be as little room for interpretation as possible.

When is the payment due? How long does the payer have to make the payment?

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting Tips (con’t)

Express a list in a sentence by using numbers or letters, separated by semi-colons.

For lists with lengthy or wordy items, use bulleted or numbered phrases that are separated with carriage returns.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting Tips: Reasonable person

Include a “reasonable person” standard of performance to clauses that provide for activities to be performed to the satisfaction of the other party.

The “reasonable person” standard creates an objective standard of a person who exercises average care, skill, and judgment.

Which clause sounds more objective? Payment is due upon submission of satisfactory data sets for each

subject. Payment is due upon submission of reasonably satisfactory data sets

for each subject.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting Tips: Amendments

Amendments are contracts that change the terms of other contracts.

Be aware of the difference between unilateral and bi-lateral amendments.

Poorly written amendments can impose new policies or terms on previous periods of the contract.

Amendments to add funding or extend a simple time period can be misleading. Pay specific attention to current amounts funded versus cumulative amounts funded.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting: Contract breach

When a party to an agreement does not adhere to the terms of the agreement, they are said to be in “breach”.

A provision for breach should explicitly outlines the terms for how each party acts in the event one party is not behaving as expected, either with payment or performance.

It’s important to remember that either party can breach an agreement. At the time of agreement, neither party can predict what will happen.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Drafting: Represent, Certify, and Warrant

REPRESENT - “statement express or implied . . . to the other [party], before or at the time of making the contract, in regard to some past or existing fact . . . Which is influential in bringing about the agreement”.

CERTIFY - “[t]o testify in writing; to make known or establish as a fact”; “to vouch for a thing in writing”; “[t]o warrant”.

WARRANT - “to engage or promise that a certain fact or state of facts, in relation to the subject-matter, is, or shall be, as it is represented to be”.

Quotes: Black’s Law Dictionary, 4th Edition, West Publishing Co.: St. Paul, MN, 1951

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Contract subject to sponsor policies

Incorporation by reference: Rather than inserting the language in the contract, the drafter references an external document.

This is a way to avoid large documents and the parol evidence rule, simultaneously.

Parol EvidenceDOES NOT COUNT

Counts!

Including anything I say here that references something somewhere else. …as referenced in Foundation’s World Domination Policy.

World Domination Policy

Counts!

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Contract subject to sponsor policies

Incorporation by reference poses pitfalls – BEWARE

a) Review the document being incorporated – it may conflict with institutional policies or with terms in the contract;

b) If the reference is to a Web site, check the URL – it may be broken or obsolete;

c) For a document that is expected to change, but be well documented, such as a protocol, use the phrase, “as amended”. Conversely, if it is a policy or list of representations, for instance, then use the phrase, “in effect at the time of execution”.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Agreement Type: Beyond Grant vs. Contract

Agreement Activity

Data Use Agreement (DUA) One party wants to use the data or information of another party. Often used for Limited Data Sets.

Material Transfer Agreement (MTA)

Materials, i.e. software, biological materials, are distributed from one party to another.

Technology/Equipment Loan One party provides equipment or devices for use with the intention of returning the device. Common when a company request s an investigator’s opinion on a product.

Collaboration Agreement Projects undertaken by two or more parties, where no funds change hands.

Confidential DisclosureAgreement (CDA) or Non-Disclosure Agreement (NDA)

One or both parties intends to disclose confidential information for a specific purpose.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Agreement Types: Data Use Agreement

Key elements of a Data Use Agreement:

What information precisely will be shared?

Who precisely can use the data?

For what exact purpose can the data be used?

For what purpose is the use of data expressly prohibited?

When does this agreement expire?

Contact information

Breach Clause

Governing law

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Agreement Types: Equipment Loans

WHY?

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Agreement Types: Equipment Loans

Who owns the equipment?

Who is responsible for costs of shipping, insurance, installation?

Who owns the data generated?

Can the institution publish?

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Various Parties

Types of Parties Likely Motivations

Institutes of Higher Education - Private Public health benefit and/or education

Foundations Wild Card! – Do your homework.

Industry/Commercial Sponsors Profit

Nonprofit Associations Mission driven

Government Broad focus on public benefit.

Institutes of Higher Education - State Benefit of the citizens of the state.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Considerations for Parties

Types of Parties Data Use Agreement

Institutes of Higher Education - Private

Reserve the right to publish. Ownership of new IP.

Foundations Atypical

Industry/CommercialSponsors

Sending Data to: Ability to use the data for commercial purposes. Consider licensing.Receiving Data from: Be mindful of reach through rights to own future inventions using data.

Nonprofit Associations Rights to publish or republish copyrighted material.Right to use new IP, including sharing with other partners.

Government DUA’s from government entities tend to be inflexible.

Institutes of Higher Education - State

Reserve the right to publish.Ownership of new IP. Be mindful of indemnification.

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind

Contact Information

Carolyn Kendall Poerio, CRA

carolke@gse.upenn.edu

Adam Rifkind, Esq.

rifkind@upenn.edu

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©The Trustees of the University of Pennsylvania, Carolyn Poerio and Adam Rifkind