Communal Representative Actions

The issues

What are the responsibilities of communal representatives who are in charge of spending public money?
If such a representative makes an oral agreement with a worker to carry out work and specifies the price and other details, is that agreement binding?
If another worker is then found who could do the same work for a lower price, is there a duty to save public funds even if it means reneging on the earlier agreement?

The Jewish Perspective

Publicly appointed or elected officers are obliged to honour the commitments they make on behalf of the public, whether these commitments are expressed orally or in writing. This is so, whether the commitment is made to a private individual or a public body.

Such commitments must be honoured even if, in result, the public will incur financial loss.

Accordingly, in the above case, all commitments between the first worker and the synagogue must be honoured by both parties.

However, if the officers have purchased something on behalf of their organisation which is grossly damaged, or they have engaged someone to do work who is later found to be incapable of doing it, if it is clear that anyone in a similar situation would demand a refund or terminate his contract, the officers of the organisation are also permitted to do so.

Commitments by representatives of a public organisation on behalf of their organisation are Halachically binding even when only verbal, as we state above. This is true even in situations where such a commitment would not be binding for a private individual. For example, commitments to buy or sell items that do not yet exist ( Dovor Shelo Ba L'Olam ), and commitments involving "games of chance" ( Asmachta ), or commitments to perform services ( Kinyan Devarim ) even when no formal Kinyan was made, are all Halachically binding on a public organisation.

If commitments made by communal representatives were known to be detrimental to the common good at the time they were made, they are of no effect. This is because the representatives were appointed by the public to act on their behalf to the best of their ability, not to their detriment. If they act in a manner which is known to damage the community, they lose their status as representatives. Accordingly any commitments entered by these officers for personal gain are void and need not be honoured by the community or organisation whose interests they purported to represent.

Similarly, if the bylaws of an organisation state that a certain matter may only be done following a vote of the full board or by public referendum, a commitment made on its behalf in the absence of such a ballot does not bind it.

In the two cases described above, the representatives may be held personally liable in respect of commitments made by them and that they will not be entitled to seek reimbursement from communal funds.