- Municipal Contracts for Emergency Work - Do It Right
- December 15, 2012 | Authors: Adam L. Browser; Laura Nazginov
- Law Firm: Ruskin Moscou Faltischek, P.C. - Uniondale Office
In dealing with the devastation of superstorm Sandy, municipalities or government agencies may be reaching out to contractors to provide emergency work. Contractors may be promised compensation from a city or town budget, FEMA monies or insurance coverage. While municipal contracts for emergency work may be a great opportunity, contractors are strongly advised to proceed with caution.
The general principle regarding municipal contracts is that a municipality is not liable for payment under the contract if it is not entered into in compliance with the municipality’s statutory requirements. The contract must be entered into by an employee with authority to bind the municipal corporation and must comply with the local rules. For example, in the City of Long Beach, no contract for public work involving an expenditure of more than $20,000, or a purchase contract involving an expenditure of more than $10,000, can be awarded without a resolution of the City Council. Furthermore, the contract funds must be appropriated in the budget or otherwise provided for by the City Council. Failure to comply with these laws exposes a contractor to the possibility that it will not be able to enforce its rights if payment is not forthcoming.
Even where services have been rendered, courts will not compel a municipality to pay if the municipal rules were not followed. In those circumstances, courts have denied any recovery whether on contractual or equitable grounds.
Contractors are strongly advised to contact knowledgeable counsel prior to entering into such contracts. Municipal contracts can be very lucrative and positive for contractors - so long as they are entered into correctly.