The purpose of competitive bidding is to obtain the best economic result for the public entity and ultimately for the taxpayer. Any modification must not be detrimental to the interests of the municipality and must not make the proposal more attractive to any potential bidders.
Plaintiff lessee and defendant lessor entered into a commercial lease for municipally owned property. The agreement contained a cancellation clause that provided for payment of improvement costs and damages. Six weeks after plaintiff and defendant signed the lease, N.J.S.A. 40A:12-14 (section 14) took effect, which required public bidding for leases of unused municipal property. Defendant cancelled the lease but refused to pay the damages. Plaintiff sued defendant for breach of contract. The trial court held that the commercial lease was valid and its cancellation clause with stipulated damages was enforceable. The appellate court affirmed the trial court's decision. On further appeal, the state supreme court affirmed the appellate court’s order.
Was N.J.S.A. 40A:12-14 (section 14), which required public bidding for leases of unused municipal property, detrimental to defendant’s interest in the commercial lease for municipally owned property entered into with plaintiff?
N.J. Stat. Ann. § 40A:12-14 (1971), did not apply retroactively to the lease and that the lease satisfied the requirements of the statute that controlled because the lease amendments were not detrimental to defendant's interests and the executed lease was substantially similar to the lease as described in the bid specifications.