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6.3.4 Contracts and Agreements​​​​

​​​​​​​​​​​Locations entering into contracts must comply with archdiocesan policies and procedures on signing and approval authority. Whenever possible, locations must use archdiocesan standard forms for contracts and agreements, which are provided as resources in this handbook. Employees who are not persons in charge, volunteers, chairpersons, and members of parish and school councils and committees may not sign any contracts whatsoever at any time.

The Office of the Legal Counsel reviews: Photocopiers and Other Office Equipment

Leasing Photocopiers and Other Office Equipment

Locations should not lease office equipment or enter into long-term maintenance agreements without first completing the relevant portions of the Location Technology Checklist. This will help the location determine its needs and whether the equipment is appropriate.

Photocopier leases are particularly problematic and are often predatory in pricing; always unreasonable in the terms and conditions imposed on the consumer; drafted to favor the copier, financing, and maintenance companies; and impossible to terminate prior to the end of the lease.

While this section focuses on photocopier issues, the policies and procedures set forth herein are applicable to all office equipment.

Lease Features for Photocopiers

Common features:

  • The term runs for 3–5 years.

  • The cost is exorbitant in relation to the retail value of the copier: the monthly payment may be hundreds to thousands of dollars, depending on the type of machine(s) and the volume of copies purchased.

  • A finance company usually assumes the lease, thereby becoming the owner or "Lessor" of the equipment while the school or parish becomes the "Lessee."

  • A separate long-term maintenance agreement generally accompanies the lease.

  • Consumables, such as paper and toner, are usually not included in the price.

  • The small print in these leasing, financing, and maintenance agreements typically contains the following provisions:

Upon termination of the lease, the Lessee must either purchase or return the machine to the Lessor (often out of state) at the Lessee's cost.

Late payments give the Lessor the right to consider the agreement(s) in default and may obligate the Lessee to pay the entire amount of the lease, financing, or maintenance agreement immediately.

No early termination of the agreement is allowed, except if the Lessee agrees to buy out the remainder of the term left on the agreement (e.g., a Lessee who signs a lease for $500 a month for 60 months must pay the Lessor $30,000, even if the machine stops working after one month).

The applicable law and location for resolving disputes is not in California.

In contrast, locations can buy refurbished photocopiers for a fraction of their original retail cost. Maintenance companies offer competitive pricing for either month-to-month or annual contracts; these too can be found online or through your sales representative.

Lease Documents for Photocopiers

Photocopier leases generally have three parts: an order, a lease, and a maintenance agreement. All three parts should be sent to the Department of Applied Technology at the archdiocese for initial review and then to the Office of the Legal Counsel for final review, as appropriate.

The order

The order generally describes the equipment to be leased. The sales company preparing the order is often the same entity that offers the maintenance service.

The lease

The leasing entity is not typically the same as the manufacturer or salesperson; it is usually a financial entity, like a bank, that simply finances the lease, thereby becoming the Lessor. Sometimes it is the financial arm of the manufacturer. The Lessor offers no warranties whatsoever and is not responsible if the equipment selected by the location does not work properly or is not adequate for the school or parish needs. The Lessor is the owner of the equipment throughout the life of the lease, and therefore, the photocopier may not be moved (not even to another room) without the Lessor's permission. The lease is not cancellable for any reason. If the photocopier breaks down or turns out to be unsuitable for the needs of the location, the lease obligations must still be paid. The interest rate is not disclosed and it is usually high. The location should always determine the interest rate before agreeing to enter into a lease.

Certain modifications must be made in the lease itself before it is executed:

  • The jurisdiction of disputes must be changed to California.

  • There should be no provision for increases in payment for the life of the lease.

  • Automatic renewals at the end of the lease term should be no longer than month to month.

  • There should be no charge for insurance coverage; the equipment is covered by the archdiocesan insurance​.

The cost of maintenance should not be included or "wrapped" into the lease agreement; otherwise, the maintenance agreement becomes non-cancellable for any reason and the cost of maintenance may be factored into the buyout cost at the end of the lease.

The maintenance agreement

The maintenance agreement is usually a separate document from the order and the lease, although as mentioned above, it is occasionally wrapped into the lease document. The term of the maintenance agreement usually matches the term of the lease. However, a shorter maintenance agreement that can be renewed if the location is satisfied with the service is a better practice. All maintenance agreements must include the archdiocesan Exhibit A: Ad​dendum to Photocopier Agreements ("Addendum")The Addendum may not be altered or modified without approval from the Department of Applied Technology and the Office of the Legal Counsel. The Addendum contains safeguards for the location.

The location must maintain copies of all agreements, executed by all parties, in a secure, easily accessible location for the life of the photocopier lease.

Buyout of Pre-Existing Leases

A salesperson often entices a location to enter into a new lease by offering to buy out an existing photocopier lease and provide the location with a newer, better photocopier for the same or a lower monthly payment than the pre-existing lease. This practice perpetuates the lease cycle. While the location may get an upgraded machine, the obligation to make lease payments may go on indefinitely. There are several guidelines that must be followed in order to avoid liability for an improperly terminated lease.

  • The location may not enter into negotiations for a new lease unless the existing lease will expire in six months or less.

  • The location must read the pre-existing lease to understand the buyout provisions, including time limitations.

  • Under no circumstances should a location allow a pre-existing leased copier to be removed from the premises by the new vendor without documentation from the original Lessor that the lease has been properly terminated.

  • The location should be prepared to cooperate with the new vendor to obtain buyout and equipment return information to facilitate the procedure.

  • The location is not allowed to accept payment from a photocopier vendor to be deposited into the location's account for a buyout. Checks may be accepted by the location only if the check is made payable to the Lessor of the pre-existing lease.

  • The location should arrange to have all information on the pre-existing copier permanently deleted before it is removed from the premises, in order to remove all retained sensitive and confidential information. If the new vendor is unable or unwilling to do so, the location should make arrangements with its pre-existing service vendor to have this done before the equipment is removed from the location.

Execution of Office Equipment Agreements

Before a lease or maintenance agreement for office or school equipment may be executed, it must be sent to the Department of Applied Technology for approval, and the Department of Applied Technology will forward it to the Office of the Legal Counsel for review if necessary. No equipment leases or maintenance agreements for offices or schools may be signed without prior approval.

If the total value of the lease or maintenance agreement is $20,000 or less, it may be entered into by the location in the location's own name and tax identification number and executed by the pastor for a parish or elementary school and by the principal for a high school.

If the total value of the lease or maintenance agreement exceeds $20,000, it requires the approval of the regional bishop before it is submitted to the Department of Applied Technology. These leases must be signed at the archdiocesan level as follows:

  • For parishes, the lease or maintenance agreement must be entered into in the name of "The Roman Catholic Archbishop of Los Angeles, a corporation sole."

  • For schools, the lease or maintenance agreement must be entered into in the name of "Archdiocese of Los Angeles Education & Welfare Corporation."

To determine the value of the lease agreement, the location should multiply the monthly lease payments by the entire length of the lease. For example, a 60-month lease at $500 per month equals $30,000 and therefore must be signed at the archdiocesan level. Likewise, to determine the value of a maintenance agreement, the total amount of all scheduled payments over the life of the maintenance agreement is the amount that determines at what level it may be signed. Other Contracts

This administrative handbook provides guidance and resources for many other types of contracts such as: