Whether due to changes or unforeseen circumstances, nonprofits amending contracts must take care to comply with the terms of the agreement and applicable law. The term
A well drafted contract accurately represents what both parties expect from the agreement. Your nonprofit organization could end up in court or out of pocket large sums of money if you don’t get it right. It is, therefore, important to have the contract represent all parties’ expectations.
Quite simply, a contract is an agreement between two parties that can be enforced by a court. It involves an offer by one party to provide something of value to another party, followed by the other party’s acceptance of the offer and exchanging money or something else of value in consideration for the services or goods that are to be provided.
Force majeure has become the word du jour; French for superior force, it refers to a principle of contract law in which parties to a contract can limit their liability and performance obligations. In the simplest terms, it allows parties to suspend or discontinue the performance of contractual obligations in cases of emergent circumstances beyond the parties’ control. It may also operate to limit contractual liability. But its practical application is nuanced. Here’s what you need to know:
Many nonprofits use some form of waiver or release in their programs. Typically, volunteers and participants are asked to assume the risk of participation and hold the organization harmless if they are injured. However, waivers and releases are not foolproof as many courts do not favor them. Still, they are often successful, and nonprofit organizations have nothing to lose in requiring them.
A legal audit is an overview of an organization’s non-financial compliance, governance and risk management issues. Organizations typically consider a legal audit when new management takes over and wants to ensure they are starting with a clean slate or the in the wake of a costly mistake.
Nonprofits tend to view MOUs as a kinder gentler way to document their intentions. However, a contract is, at its core, an offer by one party to do something, an acceptance by the other party, and the promise to exchange something of value to seal the deal. Under this definition, the MOUs we see nonprofits create are almost always bare bones legal contracts.
Download our free guide to learn about the many elements needed to run a successful nonprofit organization, as well as how to avoid common pitfalls and mistakes.