Termination of Contracts
Adams Stirling PLC
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TERMINATION OF CONTRACTS

QUESTION: I received two conflicting attorney opinion letters on whether the termination of a contractor must be done in open session. What is your opinion?

ANSWER
: Although terminating a contract is not one of the approved categories for executive session, canceling contracts should be done in executive session. Before ending a contract, boards often engage in a wide-ranging discussions about problems with the contractor, possible legal consequences related to the termination, and input from legal counsel on how best to minimize legal exposure (potential litigation is one of the approved reasons for discussing matters in executive session).

If the debate about terminating a contract were done openly, it would compromise the association's legal position and expose the board to potential claims from the contractor. Accordingly, discussions related to the termination should take place in executive session. It goes without saying that anytime the board contemplates terminating a contract, it should get advice of counsel.

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Adams Stirling PLC