Contractual considerations for students’ unions
Representatives will often find themselves faced with agreements or contracts to sign, including sponsorship, advertising, coaching or marketing.
It is important to be able to identify any potential areas of concern in these documents before entering into them.
Why would a students’ union need external advice before entering into a contract with a third party?
In many cases a students’ union may be presented with a contract from a third-party supplier, coach or service provider and be told that the document is in a standard form and is not open to negotiation. This can sometimes be true but is often a commercial tactic to avoid the need for negotiation and to ensure that the terms and conditions governing the contract will be those of the third party, and which are likely much more friendly to them than to the union.
It is important for union representative to recognise the situations in which those supplier friendly terms and conditions may not be suitable, so that a better position can be agreed between the parties to better protect the union. In some cases this can be handled internally but for contracts of a particular importance, or of a high value, it is advisable to take professional advice to ensure the union does not end up out of pocket or with liability for any contractor breaches.
Key terms and pitfalls
Key terms on which to be on the lookout, or pitfalls to avoid, include:
- Who is the contract with? If the student union is unincorporated, the contract will have to be made with individual trustees of the union, as the union itself has no distinct legal personality. The ‘party’ clause will therefore need to include accurate details (including names and addresses) of all current trustees.
- Entire agreement clauses – which can nullify any previous representations or commercial discussions (on both sides). These are often beneficial, as you have greater certainty over the terms of the arrangement as they are all set out in the actual contract, but it is then important to ensure that any key commercial terms that were finalised in the negotiations, either in person, over the phone or on email, are then actually included in the drafting.
- The "battle of the forms" which is a colloquial term for the legal uncertainty relating to whose standard terms and conditions may be attached to the signed contract. Many contracts refer to a separate set of terms and conditions which are to apply, and whether these are accepted or replaced by a different set under a counteroffer can be a complicated area.
- Limits on liability – supplier friendly contracts will often try to limit liability as far as possible, and to remove any indemnities under which the union could recover costs. Sometimes this will be commercially acceptable, but it is important to ensure that liability is duly apportioned so that the union could recover appropriately.
- Assignability and/or transferability – contracts may include clauses allowing the supplier to sub-contract the services, or to assign/transfer the benefit of the contract to another party. Care should be taken here to allow the union a certain level of control over this process so that you are only having to deal with people or parties you know.
- Data Protection/UK GDPR – as the contract will often involve services relating to students it is important that there are sufficient obligations placed on the supplier to deal with the personal data relating to students in compliance with all relevant data protection legislation and UK GDPR. This is not only to protect the students themselves, but also the union from any claims that they did not take sufficient action to ensure the safety and proper use of such data.
- Execution blocks – It is important to make sure that the signing formalities are correct to ensure that the contract is binding and enforceable. If the student union is unincorporated, the general position is that all trustees will need to sign the contract. However, it is administratively easier if the trustees pass a resolution under s.333 of the Charities Act 2011 to authorise two trustees to sign on behalf of the rest of them. If the union has been incorporated as a company or CIO, it has a separate legal identity and authorised people may sign the contract on its behalf. However, care still needs to be taken, as it will not necessarily be the case that any member of staff is able to sign. In all cases, the union will need to check its governing document and the terms of any delegated authorities approved by the board to see what the exact requirements are.
Wrigleys have specialist commercial solicitors who work closely with a number of students’ unions and would be very happy to advise on any contractual or commercial issues which a union may feel would benefit from professional review.
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The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors