Local School Board Can Render a Contract Void because it Exceeded Its Statutory Authority

Jul 25, 2018

There was no legal recourse for the contractor who entered into the contract with the School Board.

Contractors working for governmental agencies, more often than not, are at a disadvantage when legal disputes arise. A Virginia case provides yet another harsh lesson for contractors that reinforces the need to have all contracts, especially government contracts, reviewed by an attorney prior to signing. H.S. Martin v. Lee County School Board, U.S. District Ct. W. Div. Case No2:16CV00010.

An article in Hirschler Fleischer Construction Law Blog explains what transpired.

The contractor, Martin, entered into an agreement with the Lee Co. School Board “to repair weather damage to a middle and high school” after meeting “with School Board members, maintenance supervisors, and the school superintendent.”

Martin was unaware that “local government bodies in Virginia only have authority granted by the General Assembly. If a local government body enters into a contract that exceeds its authority, the entire contract is void and unenforceable.”

The contract amount was $1.4 million. Martin was paid $900,000. A dispute arose over the cost of repairing a gym floor and Martin was put on notice to stop construction. The contractor, at that point, had performed additional work totaling over $500,000. The School Board refused to pay this amount.

In the ensuing litigation, the Court “found that the School Board had not followed the procedures in Virginia’s Public Procurement Act (the “VPPA”) for competitive bidding and emergency procurement.” Because the School Board had not adhered to the required procedures, the contract was “void ab initio (from the beginning) because they were ultra vires (beyond its authority),” and the Board had no legal obligation to pay Martin for the balance of the contract.

The contractor, who presumably acted in good faith, was left without a legal remedy.

Source—

Take Care When You Contract With the King, Hirschler Fleischer Construction Law Blog, June 13, 2018.