The University of Illinois Office of University Counsel

Business Transactions & Contracts

Business Transactions

A contract is an agreement between two or more parties that is enforceable at law. Think of a contract not as simply a legal document but as a business document that spells out the terms of a transaction with clarity and in sufficient detail so that, later, either party can enforce the agreement to achieve their original intentions.

In order to be enforceable, a contract must contain certain basic elements. For example, the parties must come to a “meeting of the minds” as to the terms of their transaction. The parties must exchange something of value called “consideration,” which is not necessarily money. Their agreement cannot have an illegal purpose. Each party must have the legal capacity to enter into the agreement. Many University contracts also must satisfy specific laws and policies, such as the state Finance Act and Procurement Code. Do not be fooled by document titles: a Memorandum of Understanding generally is a contract and should be treated as one.

As a general rule, only the University Comptroller has the authority to sign contracts for the University. The Comptroller has delegated in writing his signature authority to specific individuals, sometimes only for certain purposes. Do not sign contracts for the University unless you have delegated authority.

OBFS policy requires that certain contracts be reviewed for legal form and validity because they present greater financial or reputational risk to the University. Counsel may review other contracts as appropriate. The following types of contracts must be reviewed and approved by University Counsel prior to being signed by the Comptroller or delegate:

  • contracts that require the President’s signature;
  • contracts to be submitted to the Board of Trustees for specific approval;
  • settlements of claims or disputes;
  • revenue generating healthcare contracts at the Chicago campus;
  • contracts for legal services;
  • contracts related to the sharing of student data with outside entities; and
  • employment-related contracts, such as separation agreements.

If you have a question about a contract or proposed business arrangement, you should first contact the business office designated to handle the subject matter in question. If you do not know what business office to contact, call the Office of University Counsel for referral.