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Williams Scotsman, Inc. v. The Garfield Board of Education

379 N.J. Super. 51, 876 A.2d 877 (App. Div. 2005)

PUBLIC CONTRACTS; EQUITABLE ESTOPPEL—A board of education that enters into a contract with a builder without soliciting public bids and that assures the builder that public bidding for the contract is not required can be estopped from later claiming the contract is void for failure to solicit bids.

A builder entered into a purchase order contract with a local board of education to provide ten trailers for preschool students. The board of education did not solicit bids for the contract as required by the Public School Contracts Law. After the contract was executed, the builder asked a board representative if public bidding was required for the work to be performed under the contract. The board assured the builder that it was not required to solicit bids for the work because it did not have to depend upon the state to pay for the work and it had its own money to pay the builder directly. The builder then proceeded to construct the trailers and, upon their completion of the work, it notified the board that the trailers were ready for delivery. The board refused to accept delivery and the builder sued for breach of contract asserting that the board breached the contract by its failure to accept delivery of the trailers and to pay for the work performed. The board moved for summary judgment, arguing that the contract was void due to the board’s failure to solicit public bids in compliance with the Public School Contracts Law. The builder moved for summary judgment, asserting that the board should be estopped from relying on the statute. The lower court rejected the builder’s equitable estoppel assertion, ruling that the builder should have been aware of the requirements of the public bidding statute.

The Appellate Division reversed the lower court’s ruling, holding that the board should be estopped from relying on the Public Contracts Law. In reaching its conclusion, the Court evaluated the equitable estoppel doctrine and looked at cases where the doctrine had been applied to public entities. It discussed the New Jersey Supreme Court’s ruling in Summer Cottagers’ Association of Cape May v. City of Cape May, 19 N.J. 493 (1955), where the court established two categories of actions that trigger the equitable estoppel doctrine: (1) an act utterly beyond the jurisdiction of a municipal corporation; and (2) an irregular exercise of a basic power under the legislative grant in matters not in themselves jurisdictional. The Court held that the board’s action in the present case constituted an irregular exercise of basic power triggering equitable estoppel. It focused on the fact that the builder had “reasonably relied” on the board’s assertion that public bidding was not required for the contract and that it had its own funds to pay for the work. As a consequence, the Court concluded that the builder was entitled to assert equitable estoppel against the board of education.

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