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Breach of contract leads to lawsuit against New Mexico schools

6/16/2011

A lawsuit was recently filed against the Taos Municipal School District in New Mexico, as the Albuquerque-based DRB Electric claims it breached their contract, the Taos News reports.

The complaint, which was filed in May with the Eighth Judicial District Court, states that the school district has agreed to a contract with the company worth $1.8 million in January 2009 to "perform infrastructure computer cabling and maintenance." However, district staff told the paper the contract violated the procurement process, and also, was not approved by the school board.

Regardless, DRB continued with its plans, as it was never told of this development. In February 2010, the paper says the company was told that its work would be postponed. DRB claimed it would grant the district an extension for its work while the school system figured out its complications. However, when the contract was never extended, DRB then billed the school for $441,091 in "lost revenue from cancellation of signed contract."

While this lawsuit continues, the case highlights the need for both parties to pay strict attention during the negotiation process. Companies should ensure that their soon-to-be partner is able to actually approve a contract and its terms of use, lest the agreement fall apart and expenses be lost.