This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Whether a transaction between a public contractor and one who is a public officer is within the scope of statutes which forbid a public officer to have an interest in a public contract, is a question on which there is some difference in result, depending in part on the wording of the different statutes and in part on the construction placed upon the statutes by the courts.1 A public contract is held not to be rendered invalid by the fact that the contractor purchases certain supplies from an individual who is also a public officer.2 Under a statute which provides that no officer shall be interested directly or indirectly in a contract with a town, a contract by a contractor for a public improvement whereby he purchases certain material from a corporation in which municipal officers have stock is said to be valid, if the purchase is made after the public contract is let.3 If, however, the contractor makes arrangements to make such purchases from a public officer before the public contract is let, such transaction is a violation of the statute.4 An assignment of the amount due under a public contract to a bank of which a public officer was a member, to secure a loan to such contractor, is said to be illegal.5
6 Byrd v. Cook, 146 Ga. 657, 92 S. E. 61.
7State v. Rickards, 16 Mont. 145, 50 Am. St. Rep. 476, 28 L. R. A. 298, 40 Pac. 210.
8London Electric Lighting Go. v. London , A. C. 434.
Contra, if such officer is to determine the sufficiency of the performance of such contract. People's Savings Bank v. Big Rock Stone & Construction Co., 81 Ark. 599, 99 S. W. 836.
1 James v. Hamburg, 174 Ia. 301. 156 N. W. 394; O'Neill v. Auburn, 76 Wash. 207, 50 L. R. A. (N.S.) 1140, 135 Pac. 1000.
2Shaw v. Waldron, 55 Wash. 271. 28 L. R. A. (N.S.) 735, 104 Pac. 272.
3 O'Neill v. Auburn, 76 Wash. 207, 50 L. R. A. (N.S.) 1140, 135 Pac. 1000.
4Northport v. Northport Townsite. 27 Wash. 543, 68 Pac. 204.
5James v. Hamburg, 174 Ia. 301, 156 N. W. 394.