Understanding and negotiating contracts for nonprofits

Eileen Morgan JohnsonPartnerWhiteford, Taylor & Preston, L.L.P.3190 Fairview Park Drive, Suite 300Falls Church, Virginia 22042Tel: (703) 280-9271E-Mail: emjohnson@wtplaw.com

Before we begin - what is a Contract?

It’s not what you call it that

counts

Elements of a Contract

Name the parties to the contract

The subject matter of the contract

Components of a Contract

Remember . . .

Who . . .

What . . .

When . . .

Components (continued)

Where . . .

How . . .

Why . . .

Only include if it matters

• Leases• Hotel and convention contacts

• Special skills or equipment

• The amount of money to be paid

• Each party’s motivation

Basic Terms

TIP: Use checklists when you are reviewing contracts to make sure that essential terms are not omitted.

Identification of Parties Product or Service Price Delivery dates

Breach Termination Notice Warranties

Opportunity . . .

Document . . .

Requirements . . .

to change some of the terms of the contract

agreement of both parties

in writing signed by both parties

Contract Amendments

TIP: Develop and use a template for contract amendments

Renewals and Extensions

BEWARE . . .

EXTENSIONS . . . are really just contract amendments Date for delivery is often only change automatic renewal provisions

Usually only benefit the party being paid

Often require lots of notice to cancel

Easy to forget they’re there

TIP: When presented with a contract that contains an automatic renewal provision, STOP and ask yourself if the auto renewal helps or hurts your organization

Boilerplate

How to change boilerplate

Independent Contractors

Waiver . . . a promise not to sue over any claims that might arise out of the contract

Valid waiver requires knowledge of the rights being waived

• State law may limit ability to waive claims that have not yet occurred

Waivers and Indemnification

Indemnification . . .

Waivers and Indemnification

one party agrees to pay expenses of other party in defending claims filed against them because of the contract

TIP: Indemnification agreements are only as good as the party’s financial condition or insurance coverage

Events . . .

Excuses . . .

are out of the control of either party

the party from performing their part of the contract

Force Majeure

Traditionally “acts of God” – severe weather such as floods, hurricanes or tornados or earthquakes

Modern version . . .

Force Majeure

wars, insurrections, strikes, utility failures, terrorist attacks, transportation shutdown

TIP – get Insurance coverage for force majeure events Event cancellation Business interruption

Use the right contract for the job

TIP: Don’t just download a form contract from the internet without knowing what you’re doing.

Eileen Morgan JohnsonPartner

Whiteford, Taylor & Preston L.L.P.

Phone: 703-280-9271

Email: emjohnson@wtplaw.com www.wtplaw.com

Contact Information