What is a contract - FAQ2

A “contract” is any agreement (whether in writing or oral) between the university (on behalf of any of its offices, divisions, schools, departments, etc.) and one or more external parties (usually these are contractors of goods or services or entities with which the university seeks to affiliate) that is intended to create an obligation.  There must be an exchange of something of value between the parties or an obligation to take some affirmative action, such as to pay money, perform services, or provide goods.  Occasionally, a contract obligates a party not to do something, such as not to disclose information.  A contract may also bind a party even if the party is receiving something of value at no charge, such as a license, data use agreement or a release from liability. 

A document need not be called a “contract” to be considered a legally binding instrument.  A “contract” may be called an “agreement,” “terms and conditions,” “purchase order,” “letter agreement,” “subcontract,” “sub-award,” "”sub-grant,” “memorandum of understanding,” “letter of intent,” “letter of understanding,” or “waiver.”  It is also possible that the document may not even have a specific title.

For a list of common types of contracts, go to Section IX on page 44, which is the next section of this Guide.