If a Texas political subdivision signs a five (5) year contract for a copy machine for example, does the political subdivision retain the continuing right under Texas law to terminate the contract prior to the expiration of the contract?
The answer is yes.
Texas Local Government Code Section 271.903 – Commitment of Current Revenue, stipulates that a political subdivision retains the continuing right to terminate a contract at the expiration of each budget period.
Attorney General Opinion DM-418 states that a political subdivision may execute a contract for a longer period than one year if the contract contains a continuing right to terminate.
Editor’s Note: This applies to all contracts including insurance related contracts. Damn – Who Signed This!