Prohibited Clauses

Below are examples of clauses or provisions that are prohibited in negotiating a contract with Rowan University, due to it being a State of New Jersey public entity. These clauses should be removed or modified. 

Arbitration

Rowan University does not agree to binding arbitration.  The State of New Jersey Attorney General has authority and control over matters of litigation or potential litigation involving state agencies; thus, Rowan University does not have the authority to limit the type or scope of judicial action.  Provisions which effectively waive the right of the Attorney General to bring actions on behalf of the State of New Jersey are prohibited.

If the contract requires binding arbitration or any mandatory dispute resolution other than legal action in New Jersey courts, remove the clause.

Exercising Control Over Litigation

If the contract contains a clause providing that the other party will control the defense or settlement of any claims that might arise out of a dispute related to the obligations or terms of the contract remove the clause.

Governing Law

Choice of law clauses requiring Rowan University's contracts to be interpreted in accordance with the laws of another state or jurisdiction other than New Jersey implicate the State's governmental immunity.  The scope of New Jersey's waiver of governmental immunity is based on New Jersey law, and subjecting a contract to the laws of another state or jurisdiction exceeds the scope of New Jersey's waiver.  Therefore, Rowan University, as a State of New Jersey public university, cannot agree to subjecting Rowan University to the law of another state.

If the contract contains clauses that would make it subject to either the substantive law or the jurisdiction of a state other than New Jersey, remove the clause and add a clause making the contract subject to the law and jurisdiction of the State of New Jersey.

Indemnity; Hold Harmless; Assumption of Liability

New Jersey laws and regulations provide that contract provisions such as limitations on the other party's liability, waivers of the limits of Rowan University's liability, and hold harmless or indemnification clauses in favor of the other party are contrary to public policy and are therefore void.  Specifically, under the New Jersy Tort Claims Act, Rowan University cannot waive the State of New Jersey's governmental immunity and assume liability for actions not covered by the Tort Claims Act.  Agreeing to such terms in violation of the Tort Claims Act would render that agreement void.

If the contract contains indemnity, assumption of risk, or hold harmless clauses, remove the clause. 

Limitation of Liability

Rowan University, as a State of New Jersey agency, cannot agree to clauses limiting the other party's liability.

If you are unable to resolve these issues contact the OGC to negotiate terms.