What is a contract?

A contract is an agreement between two or more parties to do or not do a particular thing. There must be a common understanding among the parties as to the essential terms, there must be mutual obligations, and there must be “legal consideration,” meaning that something of value is exchanged.

A contract may be called many different things and still be a contract – for example, an “agreement,” “grant,” “memorandum of understanding,” or “memorandum of agreement.” A contract may also take the form of an electronic agreement where a party indicates acceptance of terms with a mouse click.

A document may be a contract even if the university is not paying anything for the item or service that it is receiving in return.

While some contracts may be oral, NC State and the State of North Carolina require that all university contracts be in writing.  This is accomplished through a written contract or a purchase order or by use of your P-Card.

If you have a question as to whether the document you are reviewing is a contract, please contact the Office of General Counsel.

How can you tell if an agreement is a University contract?

If you arrange a contract or agreement while acting in the scope of your university employment, it is likely a University contract.  There must be a University interest at stake.

In addition, the agreement must be within your employment duties as authorized by your supervisors.  In general, agreements are not University contracts if they are entered on behalf of a separate legal entity such as a foundation (including those affiliated with the University), a student organization, or another private entity or individual.

As a State government entity, NC State University is subject to certain legal requirements and restrictions which may impact its ability to accept certain contract terms.  It is critical, therefore, that all university contracts be reviewed and executed via the appropriate university procedure.

Who has authority to sign contracts for NC State University?

As a general rule, only the Chancellor and certain Vice Chancellors have the authority to execute contracts for the University.

Anyone else executing a contract that purports to bind the University or its subunits is acting without authority and could be held personally liable for the breach of the contract or for the full value of the contract.


When may a department or unit make small purchases without review by the Purchasing Department?

Small purchases (up to $5,000) may be made by departments without processing by the NC State Purchasing Department, but only when there is no written contract or agreement or formal purchase order involved.

Purchases between $5,000 and $500,000 are normally executed via a purchase order from the NC State Purchasing Department. Bids are sought and standard Terms and Conditions are used in lieu of obtaining a Vice Chancellor’s signature.

Does the Purchasing Department review contracts for purchases of goods and services for less than $5,000?

Yes.  Any time a transaction involves a contract, the contract must be submitted to the NC State Purchasing Department.  This is true even for purchases of less than $5,000 and even when the goods or services are being provided for free.

How do I submit a contract to the NC State Purchasing Department for review?

Information regarding the Purchasing Department’s contract review services may be found here.

Does the Office of General Counsel have recommendations about what types of contract terms to accept and what types to modify?

Yes. The first recommendation is that you review the Contracts Library to determine if there is a standard agreement that fits your situation.

The second recommendation is that you read the other party’s contract terms closely and understand the business risks they pose. If you don’t understand certain terms, contact the Purchasing Department or Office of General Counsel for assistance.