Municipal contracts

The Supreme Court recently decided on the question of consequences after the mayor signed a contract, whose content did not correspond to the municipal council’s resolutions.

The Supreme Court considers these contracts void by law, as they transgress article 41 of municipal law. Moreover it is a question of invalidity, because the mayor’s act does not represent the municipality’s will, which emerges due to the law from decision-making processes of the municipal council, and is not build by the mayor himself.

Therefore the contract can be announced void, if the municipal council’s resolutions are not observed, as well as in case of completely missing resolutions of the municipal council.

Such contracts do not have any legal effect, no matter if the other contracting party did know about the deviation from the resolutions or not. Everybody should have the possibility to inform oneself about the municipal council’s resolutions, and thus cannot appeal to not knowing about the violation of resolutions. During legal transactions with municipalities it is therefore important to pay attention, if the act is part of the municipal council’s competence and if so, whether the procedure of passing the contract was followed properly.