Vendors: Be careful when contracting with charter schools.

The superintendent of the Burnham Wood Charter School signed a contract with a vendor to construct a building where the charter would operate a school in El Paso.  The contract included a paragraph in which the superintendent warranted that she had the authority to bind the entity for which she signed.  It turns out she did not have that authority.  The entity that did have the authority—the charter’s governing board—never approved the contract.  The charter school repudiated the contract and the vendor sued for breach. 

The Texas Supreme Court dismissed the vendor’s breach of contract suit, holding that the courts did not have jurisdiction of this kerfuffle.  Why no jurisdiction?  Follow this logic closely: 

  1. Open enrollment charter schools (OECS) have immunity from lawsuits just as traditional schools do.
  2. Vendors can still sue over a breach of contract, but only when the contract has been “properly executed.”
  3. Since every word in a statute has meaning, a contract can be “executed” without being “properly executed.”  That was the case here.
  4. As a general rule, a contract with an OECS must be executed by its governing board, not the superintendent.  Authority can be delegated to an individual only by charter amendment approved by the Commissioner.  No such amendment existed here. Therefore the contract, though “executed” was not “properly” executed.  Sorry, vendor.

From the court’s opinion it sounds like the vendor knew there was a problem.  The vendor’s attorney wrote to the charter school’s attorney indicating that it was understood that the contract needed to be approved by the governing board.  That never happened.  Despite the fact that the board never approved or executed the contract, the vendor argued that it already had a good contract with the charter.  Nope. 

Do these same rules apply to traditional schools?  Yes.  But the traditional school operates in a more familiar and transparent way.  We know who is on the school board. We elect them. Their names are on the website. We know when they meet.  We can attend and participate when they do.  The governing board of a charter school is often a non-profit board, comprised of people we did not elect, do not know. And who knows when or where their meetings are.

So vendors beware.  You don’t have a deal just because the superintendent says you do.  The case is El Paso Education Initiative, Inc. d/b/a Burnham Wood Charter School v. Amex Properties, L.L.C. decided by the Texas Supreme Court on May 22, 2020. 


Tomorrow: Doe v. Roe.  Must be about sex!