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Business Agreements Explained

A contract is an agreement between two or more entities which creates an obligation to do or not do a particular thing (Black's Law Dictionary, fifth edition). At UC Davis a business contract/agreement is one of a variety of formats used to document and carry out the business relationships of the campus.

A Business Agreement might be a written or oral agreement, a memorandum of understanding (MOU), a Purchase Order/Business Agreement (PO) containing terms and conditions, a permit, or an application that is signed to accept terms and conditions. To protect the interests of both parties and to reduce misunderstandings, the university requires that all of its agreements be put in writing in advance.

A legally enforceable agreement requires three elements:

  • Subject - Anything legal and permitted by policy that is not pure research. A business agreement may also be required for a piece of work which by itself is not research, but is part of a larger research project handled by the Office of Research-Sponsored Programs.

  • Consideration - The cause, motive, price, reason, material benefit, right, interest, forgiveness, or whatever the reason for having an agreement. The consideration has to be something one can identify or describe, like money. Consideration may also be an acceptance of liability or a promise not to do something one is otherwise entitled to do. Note: Each entity must receive some consideration or the transaction is a gift rather than an enforceable agreement.

  • Competent Party - Because the California State Constitution (Article IX, Section 9) charges the Regents of the University of California, a government corporation, with running the University of California, the competent party for university agreements is the Regents of the University of California. The Regents delegates its signature authority for agreements to different administrators (such as the Office of the President, the Chancellors, or the Vice Chancellors) through a complex hierarchy. At UC Davis, the Business Contracts Manager, the Director of Materiel Management, the Director of Sponsored Programs Office of Research, the Campus Architect or their designees sign most business agreements for the Regents.

Visit the Processing a Business Agreement page for instructions on how to process business contracts.

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