Long contract issue

Started by MikeK22 • 9 replies • 633 views

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MikeK22
Posts: 19

Posted:

Hello all,

My board (and I) entered into a 5 year contract 2-3 years ago without knowing that our bylaws explicitly state that we could not enter into a contract with a duration of more than 2 years. We got a new management company and noticed that the terms of the contract were really bad and that we were getting over charged. The manager attempted to deal with the vendor with no luck.

Any idea what options we might have?

RichardP13
Posts: 3,836

Posted:

Your only option, as I see it is to contact an attorney. They may be able to get you out of it, but it is the Board's responsibility, not the vendor's, to know what the governing documents states as it relates to contracts in this case.

You could have the governing documents amended to eliminate that language.

LetA (Nevada)
Posts: 2,670

Posted:

I hope your D&O insurance is paid up.

FredS7
Posts: 922

Posted:

The vendor entered into the contract in good faith and the contract was executed by your board at the time.

The association is bound by the contract. The vendor may allow cancellation if you pay a penalty.

GileaH2
Posts: 38

Posted:

I am curious what you mean by "getting over charged"?

BenA2
Posts: 1,272

Posted:

I agree with Richard that you should consult an attorney. If the board did not have the authority to sign a five-year contract, it may not be a legal contract and I don't believe their can be a breach of contract if the contract is not legal.

KerryL1 (California)
Posts: 14,519

Posted:

Interesting point, Ben.

RichardP13
Posts: 3,836

Posted:

Quote:

Posted By BenA2 on 08/22/2018 5:02 PM
I agree with Richard that you should consult an attorney. If the board did not have the authority to sign a five-year contract, it may not be a legal contract and I don't believe their can be a breach of contract if the contract is not legal.

I don't think pleading ignorance will stand up in a court of law.

PaaN
Posts: 219

Posted:

Quote:

There may not be a legal/enforceable contract with the corporation

BUT

there may be a legal/enforceable contract with the actual signers.

The signers 'may' have caused damages to the vendor should the contract need 'cancelling'.

AugustinD
Posts: 5,132

Posted:

At a former HOA of mine, the Board signed a contract with a landscaper who lacked workers' compensation insurance. A member pointed out that the covenants require such vendors to have workers' compensation insurance. The HOA attorney said the HOA could not get out of the contract without significant penalty. Fortunately the contract was short term, and no worker was hurt on the job.

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