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.
Under authority to construct streets it is generally held that a city cannot require the contractor to agree to keep the streets in repair for a certain period of time.1 Several reasons exist for this rule. It prevents letting the contract for constructing the street alone to the highest bidder; it involves a fixed liability for making future repairs which may never be made, and it throws the costs of repairs upon the fund or the persons who have to pay the cost of the street, usually the abutting property owners, whereas by statute such repairs usually are payable out of the fund raised by general taxation. These reasons may be reduced to one, namely, that the power to contract for constructing a street is not power to contract for constructing and repairing it. So a contract that "all loss or damage arising from the nature of the work to be done under the specifications shall be sustained by the contractor" is void.2 The contract may require the contractor to repair all defective work, even if the street is paid for by assessments, as this merely provides a mode of performing the contract to construct the street.3 So it has been held that a contract to keep the street in repair for a fixed period is in the nature of a guaranty of the work done, and not a contract for repairs within the meaning of the statute that requires such contracts to be let to the lowest bidder.4 On this theory a guaranty of paving for five5 or for eight.6 years has been held valid. In New Jersey such contracts are held valid, the abutting property owners, however, having a right to have their assessments reduced to a reasonable price for the street itself.7 A provision that the contractor shall assume all risk of damage to others arising from the work has been held invalid.8
11 St. Louis, etc., Co. v. Von Ver-sen, 81 Mo. App. 519.
12 People v. Featherstonhaugh, 172 N. Y. 112; 60 L. R. A. 768; 64 N. E. 802.
1 Alameda Macadamizing Co. v. Pringle, 130 Cal. 226; 80 Am. St. Rep. 124; 52 L. R. A. 264; 62 Pac. 304; Brown v. Jenks. 08 Cal. 10; 32 Pac. 701; Fehler v. Gosnell, 99 Ky. 380; 35 S. W. 1125; Portland v. Paving Co., 33 Or. 307; 72 Am. St. Rep. 713; 44 L. R. A. 527; 52 Pac. 28; McAllister v. Tacoma. 9 Wash. 272; 37 Pac. 447, 658; Boyd v. Milwaukee, 92 Wis. 456; 66 N. W. 603.
2 Blochman v. Spreckels. 135 Cal. 662; 57 L. R. A. 213; 67 Pac. 1061.
3 Allen v. Portland, 35 Or. 420; 58 Pac. 509.