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Northern Arizona University
Purchasing Policy and Procedure

Installment Contracts

POLICY:

DURATION OF INSTALLMENT CONTRACTS

Capital equipment may be purchased on an installment basis over a period of time not to exceed five (5) years.

EXCEPTION:

Exceptions to this time limitation may be made by the University President or designee. (See Section 504.01)

REQUISITIONS FOR INSTALLMENT PURCHASES

Requisitions for installment purchases must include a description of the item to be purchased and the number and dates of annual payments.

REQUESTS FOR BIDS AND FINANCING

Purchasing Services will process requests for bids, including financing. If the vendor cannot supply financing at an acceptable interest rate, Purchasing Services will request bids for third-party financing following applicable procurement procedures.

CONTRACT CLAUSES

Contracts for installment purchases must contain a "funding out" clause similar to the following:

"FUNDING OUT" CLAUSE

Notwithstanding any contrary provision of this agreement, each payment obligation of the University created by this agreement is conditioned upon the availability of funds that are appropriated or allocated for the payment of the equipment or functionally similar equipment. If such funds are not allocated and available, this agreement may be terminated by the University at the end of the period for which funds are available. The University shall notify the vendor at the earliest possible time before such termination. No penalty shall accrue to the University in the event this provision is exercised, and the University shall not be obligated or liable for any future payments due or for any damages as a result of termination under this section. This provision shall not be construed so as to permit the University to terminate this agreement in order to purchase, lease, or rent similar equipment from another party.

"BUY OUT" CLAUSE

If a possibility exists that a "buy out" of the equipment will occur before expiration of the installment contract, the agreement should contain a clause indicating the "buy out" terms and conditions and penalties to be assessed, if any, for early payment.