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Contract Basics

Defines terms and explains key contract clauses intended to minimize the University’s risk.

The Contract:

Good risk management practice often will attempt to transfer the risk of accidental loss through contracts for both goods and services.  Usually, California State University, San Bernardino requires the other party to a contract (contractor) to assume their fair share of liability arising out of the activity described in the contract.  This transfer generally is appropriate, as the contractor is most often the party in the best position to control loss.  However, poorly worded contracts may have just the opposite result by putting the burden of more risk on the University.  That is why all University contracts with outside entities are processed through the Purchasing & Contracts Administration. 

Insurance:

The insurance clauses in contract and agreements are intended to transfer of risk by requiring suppliers, contractors, tenants and users of public facilities (i.e. the “other party” to most University/Auxiliary Organization contracts) to protect themselves and the University/Auxiliary against claims or judgments arising from their products, activities or use of our facilities.  Usually the best way to assure that the transfer actually takes place (i.e. that the loss will be paid by someone other than the University/Auxiliary Organization) is to require insurance.  That insurance should also protect the State of California, the Trustees of the California State University, the University, and the officers, employees, representatives, volunteers and agents of each of them.  See the Risk Management website for insurance requirements details.