News & Noteworthy

Authored - NJ Contract Law Update - Contract Applicators v. Park Ridge: Sui Generis Contract Issues Involving Government and Construction
NOVEMBER 26, 2012 | Windels Marx - Commercial Litigation

In Contract Applicators, Inc. v. Borough of Park Ridge, 2012 WL 4490665 (Oct. 2, 2012), the Court dealt with multiple sui generis areas of contract law: bidding, contracting with the government, and construction contracts. The Court also dealt with the issue of "apparent authority".1

To briefly summarize the issues (in terms of an overview for the contract practioner):

  1. The case involved a contract that arose from a governmental bidding process--clearly a sui generis area of contract law in and of itself.2
  2. The successful bid ripened into a contract.
  3. The contract--as a government construction contract--involved issues of both change orders and authorization to agree to same (and with what formality).
  4. Additional work, potentially subject to a change order, was formality performed "prior to submit[ing] a written change order or obtain[ing] written approval." "Notwithstanding plaintiff's failure to obtain prior permission, defendant approved five items as change orders and agreed to pay plaintiff a total of $178,530"--but the plaintiff contractor wanted more.
  5. Plaintiff claimed that the government representative he was dealing with had the "apparent authority" to agree to the changes. The Court explained that apparent authority cannot supersede the limitations on a government's requisite formalities in approving (a) additional funds; or (b) contractual undertakings without an advance written change order as originally agreed and authorized.

The most basic moral of this story is that when dealing with an area of the law that you know or sense may be sui generis, you should strongly consider consulting with an attorney inside or outside of your firm who has experience in that area; because the learning curve will be too dramatic, and there might not be enough time in any event to navigate that curve.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

1 Apparent authority arises in connection with a person in the position of speaking or acting for another person or entity, regardless of whether there is actual authorization for the specific discussion or transaction in question. (The issue is nicely summarized in the Contract Applicators Opinion.)

2 As to sui generis contracts in general, please see my Article, "Some Types of Contracts are Sui Generis", September 24, 2012.

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