Improving Contracting on Campus: Allocating Risks Between Parties

When your institution unknowingly assumes responsibility for a contracting party’s negligence, it may suffer large losses for actions or conditions that are out of your institution’s control. The time to consider who will bear the risk of loss for third-party injuries in contractual relationships is before your institution enters into a contract. Learn how through proper contract language, insurance requirements, and a sound policy, your institution can better protect itself in its contractual relationships.

• Contracts your institution signs should have a risk allocation provision or language addressing the responsibility of contracting parties for injuries and losses arising from the contract.
• For an institution’s contract, the appropriate risk allocation provision — a one-sided or broad contractual provision, an intermediate contractual provision, or a mutual contractual provision — is often a matter of negotiation.
• When an indemnification provision in the parties’ contract shifts some or all liability for third-party claims to a contracting party, your institution must confirm that the party is able and willing to pay for liability it has assumed.