Legal Updates

A local authority is not obligated without a written order signed by all authorized signatories

June 4, 2019

A contractor performed an urgent work on the basis of a letter of commitment signed by the municipal engineer, but the local municipality contended that the letter is not binding force and refused to pay for the work.
The Court held that only documents signed by the head of the local authority and the treasurer will bind the authority. A contractor performing its work must insist that each work order is duly signed by the authorized signatories, the head of the authority and the treasurer. In exceptional cases only, it will be possible to deviate from this rule, subject to the principles of good faith and fairness. Here, all the parties acted in bad faith while trying to obligate on the costs the National Sewage Administration, although it was clear to everyone that the work to be carried had nothing to do with the local authority project at the time. Therefore, in the absence of a duly signed order and in the absence of good faith, the authority should not be obligated, despite the fact that the work was performed by the contractor.