1. Legal Aspects of Public Procurement Portland State University ISQA 440, Governmental Procurement

2. What is a Contract? A contract is an agreement between two parties that creates an obligation to perform a particular duty. A legally enforceable contract requires: contract An Offer An Acceptance Consideration Obligation of both Parties Legal Capacity to enter into a Contract Lawful Subject Matter

3. Offer and Acceptance: “A Meeting of the Minds” A legally recognized offer and an acceptance creates a “meeting of the minds’, or mutual assent, between the parties. Mutual Assent requires the presence of the following factors: 1.Both parties must exhibit a “contractual intent” [words spoken in jest or frustration will lack the requisite intent] 2.The terms of the offer must be clear and definite; 3.The acceptance must be clearly communicated.

4. The Requirement for Clear and Definite Terms Required Clarity: For terms to be legally valid, a reasonable person must be capable of readily understanding them. Four primary areas in determining definite terms: 1. the parties; 2. time for performance (term or service schedule); 3. the price; 4. the subject matter or scope of service.

5. Consideration: The Importance of the “Bargained Exchange.” Consideration must be mutual. Both parties must receive something of value. Involvement of money is not required.

6. Competent Parties Must have legal capacity to enter into a Contract No Minors No Intoxicated Persons No Persons with diminished mental capacity No Aliens No Felons

7. Subject Matter must be Legal Can not be proscribed by law Restraint of Trade imposes illegal and unreasonable burden on commerce by hindering competition Commission of a Crime Illegal Objectives A person may not legally contract a right they do not have

8. Mutuality of Obligation Both parties must be bound to a promise or neither party is bound A promise to perform an act that one is legally bound to do does not quality Most states do not recognize moral obligations as Mutuality as there is no acceptable method of determining it

9. Statute of Frauds Formal Requirements; Statute of Frauds. (1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.contractsalegoodscontract for sale

10. What Authority Defines a Contract? Sources of Contract Law Common Law – Court made case law governing contracts (primary law for service contracts) – From English Common Law, the Magna Carta, Prince John, Robin Hood, etc. Uniform Commercial Code (UCC) Warranty of Merchantability Warranty for Particular Purpose

11. Model Procurement Code Established by American Bar Association with help from others (i.e. NIGP, NASPO) Established in 1979, updated in 2000 Serves as a model for public agencies to establish their own procurement code Recognized nationally as a standard for what a code should include

12. Anti-Competitive Practices Laws Sherman Act (1890) –Prohibited restraint of trade Clayton Act (1914) –Prohibits exclusive deals and tying arrangements Robinson Patman Act (1936) –Prohibited price discrimination Federal Trade Commission Act (1914) –Prohibits unfair competition

13. Types of Authority Express authority exists when a statute or code indentifies officials to take certain actions, such as sign contracts Delegated authority occurs when a procurement official authorizes another to exercise authority on their behalf Implied authority involves activities that are logical extensions of a person’s position, even if they are not explicitly authorized

14. Procurement Legislation Public procurement is limited to what is authorized by law, while the private sector can do what the law does not prohibit Public procurement professionals should be involved with the legislative process Influence changes, seek enabling legislation, and provide expert testimony