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.
Unless specifically restrained by statute a public corporation may make a contract which by its terms is to last for a long period of time. Contracts for water and lighting are the common examples of contracts of this sort.1 The time must, however, be reasonable.2 Thus a five-year lighting contract terminable at three months' notice,3 a contract for water supply to last twenty-five years,4 or ten years,5 or for lighting to last ten years,6 or five years,7 a contract for furnishing gas for twenty-five years,8 a contract for water for twenty years,9 or for thirty years,10 have in view of the nature of the contracts been held not unreasonable. Such contracts bind successive officers,11 but they must go into full effect during the term of the officers who enter into them.12 Unless in good faith for a reasonable time and for the public interest a contract extending beyond the term of the officials making it is void.13
2 Memphis v. Adams, 9 Heisk. (Tenn.) 518; 24 Am. Rep. 331.
3 Louisville v. Murphy, 86 Ky. 53; 5 S. W. 194.
4 Storey v. Murphy, 9 N. D. 115; 81 N. W. 23.
5 McHenderson v. Anderson Co., 105 Tenn. 591; 59 S. W. 1016.
6 City of Findlay v. Pendleton. 62 O. S. 80; 56 N. E. 649.
1 Denver v. Hubbard, 17 Colo. App. 346; 68 Pac. 993; Maine Water Co. v. Waterville, 93 Me. 586; 49 L. R. A. 294; 45 Atl. 830; Seit-zinger v. Tamaqua, 187 Pa. St. 539; 41 Atl. 454.
2 McBean v. Fresno, 112 Cal. 159; 53 Am. St. Rep. 191; 31 L. R. A. 794; 44 Pac. 358.
3 Hartford v. Light Co., 65 Conn. 324: 32 Atl. 925.
4 Walla Walla v. Water Co., 172 U. S. 1.
5 Though the contract is such as to tie up the general revenue for the water fund. Monroe Water Co. v. Heath, 115 Mich. 277; 73 N. W. 234.
6 Reid v. Trowbridge, 78 Miss. 542: 29 So. 167.
7 Black v. Chester, 175 Pa. St. 101; 34 Atl. 354.
A contract for the erection and maintenance of a bridge "for all future time "14 has been held unreasonable. If the time for which a contract may be made is fixed by statute, no contract in excess of such time can be made.15 A city whose corporate existence is to end by statutory merger in a larger municipality cannot make a contract to last beyond its own existence.16 So a ten-year contract made by the officials of a town included within the limits of "Greater New York," made fourteen days before the charter of "Greater New York " was to go into effect, was held void as a mere scheme to encumber the new municipality.17 The authorities are divided on the question of the effect of a contract by which the public corporation attempts to bind itself for a longer time than allowed by law. Some courts hold it good up to the limit for which the corporation might have bound itself.18 Thus a contract for twenty years, to be renewed for twenty more if the city did not buy, is good for the first twenty where the city can bind itself for only twenty years.19 Such a contract has been said to be good as far as performed.20 Other authorities hold such a contract totally void.21 Power to contract for a water supply for thirty years is not power to make a fixed and unalterable rate.22 Under a provision of the constitution forbidding legislative appropriations for more than two years a state officer cannot bind the state for contracts extending beyond that period.23
8 Vincennes v. Light Co., 132 Ind. 114; 16 L. R. A. 485; 31 N. E. 573.
9 City of Valparaiso v. Gardner, 97 Ind. 1; 49 Am. Rep. 416; Light, etc., Co. v. Jackson, 73 Miss. 598; 19 So. 771.
10 Little Falls, etc., Co. v. Little Falls, 102 Fed. 663.
11 Detroit v. Ry., 184 U. S. 368; Pike's Peak Power Co. v. Colorado Springs, 105 Fed. 1; 44 C. C. A. 333; Illinois, etc., Bank v. Arkansas City, 76 Fed. 271; 34 L. R. A. 518; McBean v. Fresno, 112 Cal. 159; 53 Am. St. Rep. 191; 31 L. R. A. 794; 44 Pac. 358; Liggett v. Kiowa County, 6 Colo. App. 269; 40 Pac. 475; City of Valparaiso v. Gardner, 97 Ind. 1; 49 Am. Rep.
416; Indianapolis v. Coke Co., 66 Ind. 396; Grant v. Davenport, 36 Ia. 396; Smith v. Dedham, 144 Mass. 177; 10 N. E. 782; Weston v. Syracuse, 17 N. Y. 110.
12 Kerlin Bros. Co. v. Toledo. 20 Ohio C. C. 603; 11 Ohio C. D. 56.
13 Board, etc., of Franklin County v. Ranck, 9 Ohio C. C. 301.
14 State v. Ry. Co., 80 Minn. 108; 50 L. R. A. 656; 83 N. W. 32.
15 Gaslight, etc., Co. v. New Albany, 156 Ind. 406; 59 N. E. 176; (City of) Wellston v. Morgan, 59 O. S. 147; 52 N. E. 127.
16 Hendrickson v. New York, 160 N. Y. 144; 54 N. E. 680.
17 Hendrickson v. New York, 160 N. Y. 144; 54 N. E. 680.