Ohio contractors: Ensure compliance with public bidding and contracting laws or risk not being paid
Ohio’s Sixth District Court of Appeals issued a recent decision that reaffirmed the long-standing principle that contractors are responsible for ensuring compliance with not only the public contracting and bidding laws of the state of Ohio, but also the local ordinances as they relate to government contracts. It is the contractor, not the public entity, who will suffer if these laws are ignored.
In Aquatic Renovations Systems, Inc. v. Village of Walbridge, 2018-Ohio-1430 (April 13, 2018), a pool contractor and the Village of Walbridge entered into a contract for work to be performed to the village’s pool without complying with both state and local laws related to government contracts. Relying on case law from 1899 that remains binding in Ohio, the court held that the contract was invalid and void because the contractor was unable to show that the contract was awarded by the appropriate authorizing agents as mandated by statute. Specifically, the contract in the case was signed by the mayor, not the village administrator as required by the Ohio Revised Code and the Village of Walbridge Local Ordinances.
By declaring the contract invalid and void, the Sixth District otherwise kept the contractor from being paid anything on the project because, without a contract, there were no other legal avenues for the contractor to pursue for recovery. On private projects, contractors may be able to recover against a private owner despite not having a contract. Recovery in these cases is typically obtained under the doctrines of quantum meruit or unjust enrichment. These legal doctrines are remedies derived from the law of equity and are not grounded on principles of contract. However, it is well settled in Ohio that contractors cannot recover against public entities on these alternative theories of recovery. In order to be paid on a public project, contractors must have a valid contract with the public authority (i.e., the contract must have been entered into in compliance with all state and local laws). Contractors who perform work on a public improvement projects without ensuring compliance with state and local laws do so at their own risk.
Key takeaway for Ohio Contractors
Getting paid on public projects starts with verifying that all state and local laws are followed, including both the pre-contract bidding laws, as well as the laws related to the execution of the contract. Contact one of the attorneys below for more information on what you need to do to make sure your company is in compliance on its public construction projects.