ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, August 22, 2011

Local News: Fight Over A School Board's Decision to Buy a Scoreboard

Valpo Vikings

This is the sort of mess that local governments deal with all the time, but this one hits home for those of us in the Valparaiso Community School District.  As reported in the Northwest Indiana Times, the Valparaiso Community School Board held a special meeting on August 4th to approve a contract to erect a $250,000 scoreboard at the high school in time for the start of the football season.  As public expenditures go, this one seems a no-brainer, as the Board apparently believed on August 4th that it could cover the cost of the new scoreboard with advertising revenues within five years.

Some Valparaisans were outraged, however, by the lack of public discussion and by the deficient notice prior to the special meeting held on August 4th.  At a subsequent Board meeting on August 16th, public outrage was exacerbated by the revelation that the school had in fact secured only $54,000 in advertising revenues and there are divergent accounts of what information about advertising commitments was supplied to the Board at the time it approved the contract.    

But here's where it gets interesting.  The Board defended its hasty action on the ground that the $250,000 contract had already been entered into by unnamed "individuals who thought they had the authority" to enter into such a contract.  This revelation by the Board was met with a smattering of laughter at the public meeting.  Why were the outraged Valparaisans laughing?  Because they know that, under agency law, thinking you have the authority to enter into a $250,000 contract is not the same thing as having such authority.  And if residents find it laughable that some employee of the high school would claim to have such authority, the other party to the contract knew or should have known that such contracts require Board approval to be binding.  In short, there was no need for the Board to rush to approve the contract, because the contract was never binding in the first place.  

In addition, there is the separate, disputed issue of whether such a contract must be awarded only after a solicitation of competitive bids, which did not occur in this case.

Whether or not the contract was enforceable at the time it was signed, the Board has now adopted it, so it has become binding.  That does not mean that it could not be challenged of course.  Angry Valparaisans could run to court and seek to enjoin any further measures to install the new scoreboard.  But doing so would cost taxpayers more money, and so citizens who would like to hold the allegdly unaccountable Board to account while also preventing improper expenditures of public funds are faced with a Hobson's choice.


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