Office of the General Counsel Northeastern University Matt McIntyre Esq Nick Bradley Esq Tales from the Trenches Pressure Points 2 Millions of dollars have been won and lost by folks over these points The University strives to be clear in all of its agreements on these critical points ID: 202171
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Tuesday, February 26, 2013Office of the General CounselNortheastern UniversityMatt McIntyre, Esq.Nick Bradley, Esq.
Tales from the TrenchesSlide2
Pressure Points2
Millions of dollars have been won and lost by folks over these points. The University strives to be clear in all of its agreements on these critical points.
NU Pressure
Points*
Warranties
C
onfidentiality
IP - Work
Product/Work for
Hire
Indemnity
Limits
of
Liability
Dispute Resolution and Governing Law
Termination
Use of NU’s Name
Amendments
*Non
-
templatesSlide3
Not My Employee!3
The University of Massachusetts and UMass Medical Center had clinical affiliation agreements for UMASS medical students to perform educational clinical rotations at the Medical Center.
The agreements were seemingly contradictory as to which entity is responsible for the students while they are on clinical.
In the case of malpractice by a resident, who has the liability—the University or the Hospital?Slide4
Cruising in the Rain!
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A university entered into an agreement for a 3-hour cruise around Boston Harbor during one of the Tall Ships festivals. The event was marketed and several hundred people purchased tickets for the cruise.
By oversight, the contract was not sent to OGC and the agreement did not have an exit strategy in case of inclement weather.Slide5
Show Me the Money!5
Tuskegee University engaged Mallory & Evans to renovate one of its dormitories at a cost of $3.85 million.
Contract required “prior approval” by the Purchasing Department of Tuskegee if the cost of any work under a change order would exceed the total cost of $3.85 million. About $600,000 was lost!Slide6
No Way Out
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A university entered into a lease for office equipment and related maintenance. However, the agreement automatically renewed without providing a termination clause. Eventually the equipment became outdated.Slide7
Really Bad Drafting
7
In 1985,
Cetus
Corp. collaborated with Stanford University to develop a process for determining the level of HIV in a person’s bloodstream.
A Stanford researcher joined the research efforts and signed separate agreements with Stanford and
Cetus
regarding assignment of his rights to inventions resulting from the collaborative research efforts.Slide8
Anybody Want a Ferrari?8
A college terminated a probationary, tenure-track faculty member.
The faculty member claimed that her “tenure-track appointment” was equivalent to an “appointment with tenure.”Slide9
The $18 million Motorcycle Ride
On April 1, 2012, Bobby
Petrino
, head football coach at the University of Arkansas, was involved in a motorcycle crash with his 25-year old mistress.
Petrino’s
employment contract contained a multi-million dollar severance package in the event that he was terminated without
cause.
How could the University terminate
Petrino
for his behavior without paying his guaranteed $18 million severance?
9Slide10
“Moral Turpitude” clause saves the day!
10
The University protected itself by including a “moral turpitude” clause in Petrino’s employment contract which provided grounds for termination.
Petrino’s
morally questionable conduct and misleading statements cost him more than $18 million remaining on his contract.
It was quite an expensive joy ride.Slide11
Sinking Stadium11
The Project
A new $50 million multi-use stadium is 70% complete. In eight months, the seats will all be filled for the football team’s home opener. After that, more football, soccer, lacrosse, and outdoor concerts are scheduled.
The Problem
The University notices horizontal cracking in the concrete support columns. Investigation by structural engineers reveals the stadium is sinking under its own weight at six support columns.
Costs are expected to exceed $8 million.Slide12
Who assumed the risk for the structural failures?12
The contract between the University and the Architect used the American Institute of Architects (AIA) standard form agreement. The contract included
3 troubling provisions
:
Mutual Waiver of Consequential Damages
Exclusive Remedy
Limitation of LiabilitySlide13
Mutual Waiver of Consequential Damages13
“
The Architect and the
[University]
waive consequential damages for claims, disputes or other matters in question arising out of or relating to this Agreement
.”
Impact of the Provision
The University cannot recover the following costs:
$2 million in lost future profits
$800,000 incurred because of increased interest rates
$200,000 cost of the forensic engineers’ investigation
$1 million delay claim by the contractorSlide14
Exclusive Remedy14
“
In the event any of the services of the Architect performed under this Agreement are adjudged to fail to meet the standard of ordinary care…such services shall be deemed ‘Defective Services.’ The Architect shall re-perform all such ‘Defective Services’ at the Architect’s sole cost and expense, and such re-performance shall be the owner’s sole and exclusive remedy for such ‘Defective Services.’”
Impact of the Provision
Architect only required to re-perform defective services
Services must be “adjudged” to be defective
Architect’s risk of loss is the design value ($100,000) v.
University’s risk is estimated at $7.9 millionSlide15
Limitation of Liability15
“
…the
extent
of the Architect’s liability to the Owner for any and all claims and damages recoverable under the terms of this Agreement is limited to the fee actually paid by the Owner to the Architect under this Agreement.”
Impact of the Provision
$2 million liability cap
$6 million shortfall for the UniversitySlide16
QuestionsOffice of the General CounselNortheastern University
378 Columbus Place
Boston, MA 02115
Tel: (617) 373-2157
http://www.northeastern.edu/legal/
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These materials are the sole property of Northeastern University. The information contained in these materials is for the informational and educational use of members of the Northeastern University community only. These materials are not intended as and cannot be construed as legal advice on any matter or for any purpose. Northeastern
University expressly disclaims all responsibility and liability for any actions taken or not taken on the basis of any of the information contained on this site.
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