Academy Trust Contracts

• Published date: 11 April 2022
• Subject Matter: Corporate/Commercial Law, Consumer Protection, Contracts and Commercial Law, Education, Trusts
• Law Firm: Wrigleys Solicitors
• Author: Mr Chris Billington and Alex Elliott

A question of authority.

What can an academy trust do:

• where a delegated power to authorise contracts has been exceeded; and
• to get out of a contract made in excess of any delegated authority

For schools converting to academy status and becoming a part of an academy trust there is a fundamental change to the way in which contracts are finalised. It is the academy trust, and not the school, that has legal personality, and it is the academy trust and not the school which should be party to any contract.

The trustees of an academy trust have ultimate responsibility and accountability for authorising contracts on behalf of the academy trust and to the outside world it is the trustees that have the power to sign contracts and to commit the academy trust to the obligations arising under that contract. It doesn't matter what type of contract it is, the power and authority rests with the trustees, acting in the name of the academy trust.

Yet that power and authority can and in most cases will be delegated by the trustees to senior figures within the academy trust, from the Chief Executive, Chief Financial Officer, Chief Operating Officer through to the Headteacher and School Business Manager ("SBM") and beyond. It is important that anyone authorising contracts in relation to their school, or for the academy trust, understands the limitations that will be set under any scheme of delegation.

In this note, reference will be made to SBMs, but the principles set out apply equally to anyone with delegated authority

So, what can an academy trust do:

• where a delegated power to authorise contracts has been exceeded; and
• to get out of a contract made in excess of any delegated authority.

Going Beyond Delegated Authority to Enter Contracts

Most if not all academy trusts will delegate authority to headteachers/SBMs to authorise contracts. Often that delegated authority is limited to certain areas of the academy trust's operations and the confines of certain monetary thresholds. If there is actual authority, and a SBM has acted within that authority, the subsequent contract made on behalf of the academy trust will be valid and will therefore bind the academy trust.

However, circumstances can be made complicated, where a contract has been made through apparent authority.

Apparent authority Internal governance structures of Academy Trusts are often misinterpreted by third-parties, such as suppliers. These third parties are often accustomed to making contracts with SBMs on...