52.232-39 Unenforceability of Unauthorized Obligations
Source: FAR 52.232-39 on acquisition.gov
Any clause in a commercial agreement requiring the government to indemnify a contractor is unenforceable unless specifically authorized by law and agency regulation.
Overview
FAR 52.232-39 addresses the unenforceability of unauthorized obligations in government contracts, specifically regarding End User License Agreements (EULAs), Terms of Service (TOS), or similar agreements that attempt to bind the government to indemnification clauses. The clause ensures that any provision requiring the government to indemnify a contractor or third party—potentially violating the Anti-Deficiency Act—is unenforceable unless specifically authorized by statute and agency regulations. This protects the government from inadvertently accepting financial liabilities beyond its legal authority, even if such clauses are embedded in standard commercial agreements or accepted via click-through mechanisms.
Key Rules
- Unenforceability of Indemnification Clauses
- Any EULA, TOS, or similar agreement that requires the government to indemnify the contractor or others is unenforceable unless specifically authorized by law.
- No Implied Agreement
- The government and its authorized users are not considered to have agreed to such clauses, even if they click "I agree" or otherwise accept the agreement electronically.
- Striking Unauthorized Clauses
- Any unauthorized indemnification clause is considered stricken from the agreement.
- Exceptions
- The only exception is for indemnification expressly authorized by statute and agency regulations.
Responsibilities
- Contracting Officers: Must ensure this clause is included in applicable contracts and that contractors understand its implications.
- Contractors: Must recognize that indemnification clauses in standard agreements are unenforceable against the government unless specifically authorized.
- Agencies: Must ensure compliance with the Anti-Deficiency Act and agency-specific indemnification authorizations.
Practical Implications
- This clause exists to prevent the government from incurring unauthorized financial liabilities through commercial agreements.
- Contractors should not expect the government to be bound by standard indemnification clauses in EULAs or TOS.
- Common pitfalls include assuming click-through acceptance binds the government or failing to remove unenforceable clauses from agreements.
As prescribed in 32.706-3 , insert the following clause:
Unenforceability of Unauthorized Obligations (Jun 2013)
(a) Except as stated in paragraph (b) of this clause, when any supply or service acquired under this contract is subject to any End User License Agreement (EULA), Terms of Service (TOS), or similar legal instrument or agreement, that includes any clause requiring the Government to indemnify the Contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an Anti-Deficiency Act violation (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section1341&num=0&edition=prelim" target="_blank">31 U.S.C. 1341), the following shall govern:
(1) Any such clause is unenforceable against the Government.
(2) Neither the Government nor any Government authorized end user shall be deemed to have agreed to such clause by virtue of it appearing in the EULA, TOS, or similar legal instrument or agreement. If the EULA, TOS, or similar legal instrument or agreement is invoked through an "I agree" click box or other comparable mechanism (e.g., "click-wrap" or "browse-wrap" agreements), execution does not bind the Government or any Government authorized end user to such clause.
(3) Any such clause is deemed to be stricken from the EULA, TOS, or similar legal instrument or agreement.
(b) Paragraph (a) of this clause does not apply to indemnification by the Government that is expressly authorized by statute and specifically authorized under applicable agency regulations and procedures.
(End of clause)