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 all business and legal terms included in the contract are specific and are described in detail.

Note that digital contracts are legally binding, as are online contracts that require the user to click “I Agree”.  Ensure the same guidance set out below is followed for entering into e-contracts/online contracts.

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 contract execution guidelines describing the individual positions (e.g. Dean, Chair) that have the authority to sign 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.

There must be support and approval of the contract conceptually at the highest level within an academic division (e.g. Dean or Chief Administrative Officer) before submitting the contract for the Provost to approve.

Purchases of goods and services under $100,000 can be completed through a University purchase order. The standard purchase order includes the following language to ensure that the supplier is bound by terms that will protect the University:

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.

These 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 as well as with legal advice from the Office of University Counsel. 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)

The Office of University Counsel (Corporate Services) provides legal advice on a range of contracts with a view to mitigating overall risk to the University, including reviewing, negotiating, or drafting agreements for purchases under $100,000.

Contact your CAO’s office to ensure the contract requiring review has the appropriate divisional approval(s) before requesting legal advice at legal@utoronto.ca.

For more information about how the Office of University Counsel (Corporate Services) can provide support:

https://legal.utoronto.ca/services/corporate-services

https://legal.utoronto.ca/faq

Procurement Services is responsible for conducting open tender calls on behalf of the St. George campus. When issuing a tender call (e.g. RFP), the University is required to include a contract template to provide suppliers with an indication of the contractual terms under the University expects to govern the relationship. The terms in the contract template align with the above-noted purchasing terms and conditions; though, also include a number of additional terms to protect the University.

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.

Legal services for contracts over $100,000 are coordinated directly by Procurement Services if, in the view of Procurement Services, legal services are required.