Contracts
A New York court ruled that a church could be liable on a contract for a construction project signed by its pastor without board authorization.
Key point 6-06.2. Officers and directors must be legally authorized to act on behalf of their church. Legal authority can be express, implied, inherent, or apparent. In addition, a church can ratify the unauthorized actions of its officers or directors, but this is not required.

A New York court ruled that a church could be liable on a contract for a construction project signed by its pastor, without board authorization, because the church had ratified similar transactions in the past. A contractor sued a church for breach of contract because of its refusal to pay for remodeling work performed at the church at the request of the church's pastor. The church claimed that it was not obligated to pay the contractor because its board of trustees neither authorized the work nor empowered any individual trustee or corporate officer to authorize the work. As a result, even if an oral contract existed between the pastor and contractor, the church was not bound by such a contract and cannot be held liable for an alleged breach of it. The contractor conceded that the board of trustees never authorized the work. But he insisted that the work was "constructively authorized" by the prior practice and course of conduct of the church. Specifically, the contractor argued that it was the practice of the church to delegate to the pastor the power to authorize the kind of work that the contractor performed. He claimed that because he had been paid by the church for work previously performed by him at the sole request of the pastor, his current work (also performed at the express request of the pastor) was authorized, especially since the pastor was also the president of the board of trustees of the church. Further, the contractor alleged that authorization for the work was established by the church's knowing receipt, without protest, of the substantial benefits of the work.

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