What can an educational administrator do when a vendor performs poorly under a long-term contract? Unless the college or school has tightened its procedures for contract drafting and approval, the answer may be “not much”. More than a few educational institutions have tried to cancel contracts with underperforming suppliers - ranging from yearbook publishers to laundry companies to phone vendors - only to confront a form vendor contract lasting far into the future and providing no right to cancel. Aside from multi-year terms, these contracts may have automatic renewal clauses, technical jargon, and microscopic print. A non-administrative employee, such as a yearbook or drama faculty advisor or cafeteria manager, may have signed the contract for the school. This employee may have inadvertently bound the school for years, since the vendor will say (with good reason) that the employee had apparent authority to act for the school.
In this situation, a school has two options - one short-term and one long-term. The short term option is to renegotiate the specific contract or cancel the contract and litigate a breach of contract case. Litigation will be costly, but the school will have taken a stand that it will no longer acquiesce to burdensome agreements.
The longer term, practical option is to tighten up on the procedures for drafting and signing contracts. Here are some steps that colleges and schools can take:
- Centralize all review, approval, and signature of contracts with the business office.
- Notify both outside vendors and in-house personnel that business office approval and signature are required for all contracts and that all non-conforming future contracts will be invalid.
- Insist on shorter term contracts with rights to cancel at will, or for cause, or for either party’s financial distress.
- End all “evergreen” clauses that renew the agreement automatically if a party misses a deadline for advance notice of non-renewal.
- Simplify the contract by requiring vendors to put all terms in one document, rather than having separate purchase, license, and service agreements.
- Resist the vendor’s attempt to burden-shift to the institution through warranty disclaimers or indemnity clauses.
- Insist that the contract be governed by your home state law. The contract will be performed at your site, and should not be subject to another state’s laws.
- Insist that all disputes be resolved in your jurisdiction, preferably by arbitration, rather than in a remote location such as the vendor’s home state or city.
- Use your own standard contracts for outside speakers, concerts, or hosted events such as weddings.
- Preserve the school’s rights to use intellectual property, such as the right to stream or rebroadcast or copy published items.
