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Section 9. Understanding and Writing Contracts and Memoranda of Agreement

What are contracts and memoranda of agreement?

___You know that a contract or subcontract is a legal document that sets out the terms of an exchange of value.

___You know that a memorandum of agreement is not a legal document, and that it describes a previously agreed upon arrangement for cooperation, collaboration, mutual support, or the like among individuals or organizations.

When might you use each document?

___You use a contract or subcontract whenever money is involved, or where there 's some other exchange of one commodity for another.

___You use a memorandum of agreement to clarify the relationships between or among two or more cooperating or collaborating individuals or organizations.

How do you read and understand a contract?

___You read every word of the document carefully.

___You don't allow yourself to be intimidated by legal language.

___You familiarize yourself with standard phrases and clauses that you might see in a number of contracts.

___You get an explanation - from the writer of the contract and/or from an attorney or other person whose advice you trust - if there's something you don't understand or have questions about.

___You make sure that the terms of the contract are acceptable by asking yourself:

  • Whether everything in it is feasible.
  • Whether all the conditions are possible for your organization.
  • Whether anything in the contract is dangerous to the functioning or the life of your organization.
  • Whether the resources specified in the contract - funding or otherwise - are adequate for you to be able to do the work.
  • Whether there are protections written in for you, as well as for the funder, in the case of disagreement, or charges of violating the contract.
  • Whether the restrictions and regulations, if there are any, are reasonable and not disruptive to the overall operation of your organization.
  • Whether anything in the contract is different from what you've been told previously.

___You negotiate about the points that you want to change before you sign the contract.

How do you read and understand a memorandum of agreement?

___You read every word carefully.

___You get help in understanding anything that isn't clear.

___You make sure the terms of a memorandum of agreement are acceptable by asking yourself:

  • Whether all the points are reasonable.
  • Whether it reflects what you expected and what you've already agreed to.
  • Whether the document addresses the situation or issue involved in a way you support.
  • Whether any parties to the agreement - including you - are promising anything they can't deliver.
  • Whether everything in the agreement is feasible - doable with the resources available, for instance, and within the necessary time frame.
  • Whether you are being asked to agree to something that's damaging to your organization or against its principles.

___You negotiate about any points you want to change before you sign the agreement.

___You treat the memorandum of agreement as a promise that needs to be honored just as if it were a contract.

How do you draft a contract?

___You make both the language and the content of the contract as clear and specific as possible.

___You explain who the parties to the contract are, and the time period that the contract covers.

___You explain, as specifically as possible, what the scope of services, products, or other exchange is on both sides; who is to be involved; how it is to be accomplished; when it is to be done (the time frame for the contract); and where it will take place, if that is relevant.

___If there's money involved, you explain the details of payment.

___You explain any other obligations of each party.

___You explain how the contractor's performance will be evaluated.

___You explain the consequences if either party fails to deliver on what it has agreed to.

___You explain the conditions under which the contract can be ended by either side.

___You explain the conditions under which the contract can be changed.

___When you've finished, you show the contract to others - particularly those who were involved in initial discussions with the contractor - to see if it says what you intend it to, and if it covers clearly all the specifics that you want to address.

___You give the contract to the contractor, and are prepared to negotiate some parts of it.

How do you draft a memorandum of agreement?

___You work out the agreement beforehand with the other signees, so there are no surprises.

___You make both the language and the content of the agreement as clear and specific as possible.

___You draft a memorandum of agreement in the same way, and with the same care, that you would draft a contract.