Contract Services

1. Whose contract is it?

If the contract has not been prepared by VIU, a thorough review is required to ensure that the terms are fair and reasonable, and meet VIU requirements. In particular, any indemnification clauses, limitations of liability, disclaimers, etc. should be reviewed and senior management approval may be required. Any indemnity by VIU must be approved by the provincial Risk Management Branch (UCIPP) before the contract is signed by VIU.

2. Completeness

Is the contract complete with all pages and all schedules/appendices referred to? Are there any additional terms or documents incorporated by reference?

It is difficult to properly review a contract if it is not complete and copies of related documents are not also provided. Important terms can be contained in schedules or documents incorporated by reference and should also be reviewed.

3. Parties to the Contract

Are all of the parties identified with their full legal names and are they legal entities? Are all contracting parties residents of Canada?

“Vancouver Island University” is VIU’s legal name. Use this for the party name at the beginning of the contract.

If the other party is an individual, use their full name and home address. This person must be 19 years or older (anyone under 19 does not have full legal capacity to enter into contracts).

If the other party is a corporation or society, please include their full legal name (including Inc., Co, or Corp. as the case may be). Note, many organizations do business under a name that is different than their legal name.

A sole proprietorship is not a legal entity—rather, list the individual’s personal name, followed by “doing business as [insert their business name]”.

4. Residency

Is the other party a resident of Canada?

If you don't know, please ask where the other party is resident for tax purposes.

Most businesses incorporated in a Canadian province or territory are resident in Canada.

Residency for tax purposes is different than Citizenship. If a party is a non-resident, there may be tax and other implications and it may be prudent to discuss this with Financial Services. VIU may have to withhold monies to comply with Canadian tax requirements and it is best if the contract addresses this.

5. Subject-Matter Experts

Does the contract deal with a subject-matter that is within the responsibility of another area of VIU?

Certain VIU departments/offices have primary responsibility for specific matter areas and should be consulted when contracts or other arrangements are being discussed relating to those areas.
All research contracts must be reviewed by the Scholarship, Research and Creative Activity Office.
All international activity at VIU and overseas must be reviewed by the Dean, International Education.
All contracts with software or VIU network/systems activity must be reviewed by IThelp@viu.ca
All contracts with activity around personal information must meet FIPPA requirements: contact Privacy.Officer@viu.ca.

6. Definitions

Are capitalized words used in the contract defined in a definitions section or when first used in the contract? Are the defined terms then used consistently throughout the contract?

A lack of definitions or inconsistent use of terms in a contract can create uncertainty, with the potential for misunderstanding or disputes later on.

7. Term

Is the length of the contract specified and are there clear start and end dates? Are renewal or extension terms clearly defined?

Most contracts (with binding obligations, particularly financial or performance obligations) should have a specific term and not be indefinite or automatically renewing, unless specifically approved by a VIU signing authority. This is less problematic for memoranda of understanding that may be on-going but are largely non-binding.

A contract may contain a provision that it may be renewed for an additional period of time after the initial term ends, either at the option of a party (usually requiring a period of notice) or automatically if a party does not terminate it before the renewal date (usually requiring a period of notice). Any renewal provision should be clear and unambiguous. If a continuation of the contract is important to VIU, having a renewal provision that gives VIU the right, in its discretion, to renew (and on the same financial terms) may be useful.

Contract owner must diarize applicable renewal dates to ensure that it can continue the contract if desired, or terminate it on time.

8. Termination

Does the contract contain provisions allowing the parties to terminate it prior to its expiry date?

Termination provisions should be specified and reasonable and can be with or without notice, for convenience or for cause (e.g. default or breach in performance, insolvency of a party). What is reasonable or appropriate will depend on the nature of the contract, the length (e.g. early termination may not be as critical in a short-term contract as for a multi-year contract), and the implications for the parties of an early end to the contract.

The ability to terminate for convenience at any time during the contract gives VIU the most flexibility to end the relationship (and financial obligations, if any) if VIU’s needs change or if the relationship is not working for any reason. However, if the termination rights are reciprocal, VIU should consider the implication of an early termination by the other party. The impact of an early termination can be mitigated by providing for a long period of notice or limiting the time when it can occur (e.g. X days before program delivery will start).

If there is no termination for convenience clause and termination may only occur if there is a default/breach, the contract should be managed/monitored and issues addressed in writing. Terminating for cause can be problematic and may not occur quickly.

If the contract relates to VIU course/program delivery, VIU will typically want to ensure that students who have started the program can complete it and obtain the expected credential. If a party is providing services, they would typically want to be paid for all services completed up to and including the last day.

9. Obligations after Termination/Expiry

Does the contract clearly indicate what obligations of the parties will continue after termination?

The parties may have certain obligations after the termination of the agreement that are specifically stated in the termination clause (e.g. as above).  There are also other provisions that are typically intended to continue or “survive” the end of the contract, confidentiality and indemnifications, for example.  The parties should know which obligations continue and it is best to either address it in the particular section (e.g. This obligation survives the expiry or earlier termination of this Agreement) or to add a survival provision that lists the specific sections that survive. A general provision stating that those obligations that are intended by their nature to survive will survive should be avoided if possible as it may be unclear what the parties are obligated to do.

10. Respective Responsibilities

Is there a full description of each party’s obligations and responsibilities?

Regardless of the subject-matter of the contract, it should describe each party’s obligations and responsibilities in clear and understandable terms and include milestone dates, deliverables, and performance measures if applicable given the nature of the contract.

11. Financial Terms

Are the financial terms of the arrangement specified and consistent with VIU’s standard terms?

Financial terms should be clearly stated in Canadian dollars and be consistent with VIU’s standard terms. In general, the terms should clearly identify the maximum amount payable, when due, and how and to whom payment is to be made. If VIU is paying, VIU will typically pay on receipt of a satisfactory invoice submitted to VIU’s Accounts Payable department within 30 days.  It is suggested that any unusual terms be discussed with Financial Services before VIU agrees to them.

12. Insurance Requirements

Are the requirements for insurance specified and appropriate for the risks associated with the contract? Does the other party require a certificate or proof of VIU insurance?

Contact VIU Director of Risk for assistance.

The appropriate insurance requirements will depend on the nature of the contract and the associated risks. VIU receives its core insurance coverage through the University, College and Institute Protection Program (commonly referred to as “UCIPP”) which is administered by the provincial Risk Management Branch in the Ministry of Finance. Core coverage includes liability coverage which will typically be the coverage required under a contract. Any VIU insurance requirements should be confirmed with VIU’s Risk Management Director and/or UCIPP before the contract is signed. 

VIU’s standard insurance requirements for contractors providing services to VIU is a minimum of $2,000,000 liability insurance and WorkSafeBC coverage. Other types of insurance may be required depending on the nature of the services provided (e.g. professional liability for professional services). Activities of higher risk may require a higher amount of liability insurance. 

There are circumstances in which VIU’s standard insurance requirements may be waived or reduced and these should be discussed with VIU’s Risk Management Director.

13. Limitations of Liability

Does the contract contain limitations of liability and are they fair and reasonable?

Any provision in a contract that aims to reduce a party’s liability for loss should be considered carefully and be reasonable in the context of the agreement. Limitations can be stated as a maximum amount that the party may be liable for (e.g. maximum financial cap of $X or the amount of fees paid by VIU for a particular service) or by excluding certain types of damages (e.g. no special, consequential, etc.). If VIU is agreeing to limitations of liability in favour of the other party it may increase the financial risk of the contract to VIU and should be approved at a senior level.

14. Indemnification/Hold Harmless

Is there an indemnity and/or save or hold harmless provision in the contract? 

An indemnification or hold harmless provision is a contractual commitment for one party to pay for another party’s liability, loss or damage. They are important clauses and can increase the financial risk of a party, particularly if they are too broad. Indemnities are commonly expected to be provided by services providers or by those renting another party’s facilities. In situations where parties are collaborating on an activity, it may be appropriate for each to indemnify the other.

Indemnification issues can be complex and it may be beyond the reviewer’s expertise to deal with. UCIPP can be consulted on issues relating to liability (even if there is no VIU indemnity clause requiring UCIPP approval). Generally, any indemnity should be reasonable and appropriate in the context of the contract and, if VIU agrees to indemnify, it should only be for its acts or omissions – people and situations over which VIU has control – and not the actions of the other party(ies) to the contract.

If a contract contains an indemnification by VIU, the contract must be submitted to UCIPP before the contract is signed by VIU.

15. Confidentiality/Privacy

Are confidentiality issues addressed within the contract?

Does the contract involve the collection, use or disclosure of personal information by or on behalf of VIU?

Information may be exchanged by the parties under a contract that is intended to be confidential or proprietary. The contract should address that this might occur and the extent of the obligations of the parties. It is best if the confidential information is clearly identified or there is a requirement that the disclosing party identify it as being confidential or proprietary at the time of disclosure; otherwise, it may be difficult for a party to know what they are required to keep confidential and put a process in place to ensure that the information is protected over time. VIU should avoid agreeing to keep confidential information that it will need to disclose to others in the institution (e.g. students) as part of a course/program.

VIU is required to comply with the Freedom of Information and Protection of Privacy Act (FIPPA). This has implications for the release of records and for the protection of personal information. 

16. Changes/Amendments

Does the contract specify that any changes must be made in writing and signed by all parties?

Having all amendments in writing protects the parties from misunderstanding or disputes. Verbal changes to contracts must be avoided.

17. Governing Law/Jurisdiction

Is the Province of BC specified as the jurisdiction for governing law?

Every contract, with few exceptions, should have a governing law provision identifying which jurisdiction’s laws will apply to interpret the terms and to hear any disputes. It is best if contracts signed by VIU are governed by the laws of BC. If the contract is governed by another jurisdiction’s laws (particularly outside Canada), it creates uncertainty as to how the terms will be interpreted and potentially enforced. If VIU becomes subject to the court process of another jurisdiction, it could be costly for VIU. 

18. Compliance with Laws

Does the contract require the parties to comply with applicable laws and are these stated to be the laws of BC?

As above, clauses in a contract that require VIU to comply with laws should not refer to a jurisdiction outside of BC unless there are special circumstances where VIU’s activities are outside BC.

19. Assignment

Does the contract prohibit assignment to another party without the written approval of VIU?

Generally, assignment of the contract to another party should not be allowed without the written approval of VIU. If there is no restriction on assignment, VIU may end up dealing with another party that may not be acceptable to VIU and VIU may have limited recourse.

20. Subcontractors

Does the contract prohibit subcontracting by the other party without the written approval of VIU?
Will VIU be using any subcontractors to perform its obligations under the contract and are contracts in place with the subcontractors?

A subcontractor is a person or company that will perform obligations that another party has committed to perform under a contract. If the subcontractor does not perform or performs to a substandard level, the contracting party may have to incur costs to properly complete the obligations.

If VIU has contracted with a particular service provider, that service provider should be precluded from hiring someone else to complete the work unless that subcontractor is approved by VIU. Aside from appropriate qualifications and fitness to do the work, there may be reputational, insurance and other issues that affect VIU.

If VIU will be using a subcontractor, VIU should ensure that any required approval from the other party has been obtained (if required in the contract) for the subcontractor. There should be a written agreement between VIU and the subcontractor that reflects those requirements in the lead contract that the subcontractor will perform, and includes an indemnity by the subcontractor in favour of VIU.

21. Dispute Resolution

Are dispute resolution processes specified in the event of any disagreements?
Are any provisions for formal dispute resolution (e.g. arbitration) based in BC?

Depending on the nature of the contract, it may be useful to have a mechanism for the parties to resolve disagreements before they become problems and potentially result in formal claims. It is common in collaborative situations for the parties to designate a representative who will be responsible in the first instance, with elevation to a higher level if necessary. Agreeing to a formal process for dispute resolution, e.g. arbitration, may be unnecessary, but if warranted should be restricted to BC. Arbitration or other formal dispute resolution in a foreign jurisdiction, which may be unknown to VIU and potentially costly, should be avoided.

22. Notices

Is there a notice provision identifying to whom the parties would send notices if required or desired under the contract?

Most contracts will provide that something is to be done by providing “notice” to the other party.  It is important that the contract be clear how notice can be given (e.g. delivered by person, email, etc.) and to whom as a representative of each party. This can become very important for notices of default, termination or renewal as not providing notice as required may have a significant impact on the contract. For VIU, notice should not go to a general VIU address without it being directed to a particular person or office. In most VIU contracts, a copy of any legal notice will go to the Office of the CFO and Vice-President Administration.

23. Signatories

Are signature blocks provided at the end of the agreement for each party to sign and including names, titles and signatures?

A contract should have a signature block for each party at the end of the agreement (before schedules or appendices). Depending on how the agreement is to be dated and when it will take effect, it may also be appropriate to have a line for the date to be inserted beside each signature (e.g. if the contract takes effect on the date the last party signs the agreement).