Can you enter into a binding contract with a city or township? Suppose a city hires you to hand out drinks to runners during its marathon but fails to pay you. Or it agrees in writing to buy your vacant land, then backs out of the deal. Can you sue?
And how does that work when local governments have immunity from suit?
For cities and townships, governmental immunity generally protects against tort liability, such as negligence, subject to certain exceptions. But that protection does not give municipalities a blanket escape from valid contractual obligations. A true breach of contract claim generally falls outside municipal tort immunity, so you do not need to establish a negligence exception to pursue it.
What Courts Hear Claims Against a City or Borough?
The answer is: you may proceed in the same courts where you would sue a private, non-governmental party for breach of contract.
Note that contracts with the state — i.e. the Commonwealth of Pennsylvania — involve a very different framework. Many disputes arising from those contracts fall within the jurisdiction of the Board of Claims, subject to statutory requirements, as we discuss here. See 62 Pa. C.S. § 1724. That Board of Claims requirement generally does not apply to contract claims against local governments, such as cities, boroughs, townships, and counties.
Technical Requirements
Unlike negligence claims against a municipality, claims for breach of a valid municipal contract generally are not subject to the Tort Claims Act’s $500,000 damages cap. An ordinary contract claim also generally does not trigger the six-month written notice requirement applicable to governmental injury claims. However, the contract itself or another applicable law may impose notice requirements or deadlines.
The agreement must also satisfy the rules governing the municipality’s authority to contract. In addition, the claimant must follow applicable procedures and establish the same essential elements required in other Pennsylvania contract cases: an enforceable agreement, a breach, and resulting damages.
A Recent Example
A recent decision illustrates how courts apply familiar contract principles to agreements involving local government. In In re: 374 Square Feet More or Less in the City of Bradford at Pin 01-003-106 in Fee Simple, No. 1230 C.D. 2025 (Pa. Cmwlth. Oct. 13, 2026), a non-precedential memorandum decision involving DewBoi Properties, LLC, the Commonwealth Court upheld enforcement of a settlement agreement with the City of Bradford. Although the appeal did not decide an immunity dispute, it provides a useful example of a binding municipal agreement—and the difficulty of escaping its written terms.
The Written Agreement Controls
Settlement agreements are contracts. Their enforcement therefore depends on ordinary contract principles, including whether the parties reached a meeting of the minds on all essential terms.
When parties reduce their complete agreement to writing, the parol evidence rule generally prevents either side from using earlier negotiations or promises to contradict its terms. The court cited Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436 (Pa. 2004), for the rule that preliminary negotiations merge into and are superseded by the subsequent written contract.
The consequences can be decisive. When the agreement is clear and unambiguous, courts ordinarily determine the parties’ intent within its four corners. Absent an applicable exception, such as fraud, accident, or mistake, the writing supplies “not only the best, but the only, evidence” of their agreement. Martin v. Berens, 67 Pa. 459, 463 (1871). What someone remembers discussing cannot simply replace what the final contract says.
What About a Mutual Mistake?
The court also explained when a mutual mistake can justify setting aside an agreement. Both parties must have held an erroneous belief about a basic assumption underlying the contract when they entered it, and that mistake must materially affect the agreed exchange. See Turns v. Dauphin County, 273 A.3d 66, 73 (Pa. Cmwlth. 2022).
Drawing on the Restatement (Second) of Contracts § 152, comment b, the court explained that a mistake concerning a basic assumption can make a contract voidable. But the party seeking relief must establish the mutual mistake through clear, precise, and convincing evidence. Mellish v. Hurlock Neck Duck Club, Inc., 886 A.2d 1151, 1159–60 (Pa. Cmwlth. 2005).
There is another limit: a party generally cannot avoid a contract because of a mistake whose risk that party bears. Under Restatement § 154, that risk may arise from the agreement itself, from knowingly proceeding with limited information, or from a court’s reasonable allocation of the risk under the circumstances.
Why the Court Enforced this Settlement
The City condemned a small portion of DewBoi’s property for a bus station, and DewBoi later argued that the resulting settlement lacked a meeting of the minds because it expected two utility poles to be moved entirely off its property. However, the written agreement expressly provided for relocation elsewhere on DewBoi’s property, its attorney communicated approval, the parties reported a settlement to the court, and counsel requested the agreed $30,000 payment. The Commonwealth Court affirmed enforcement, concluding that the record supported an actual agreement rather than a mutual mistake; later second thoughts did not undo the bargain.
Government contracts require attention to both the agreement’s language and the rules governing the public entity involved. Retaining a lawyer early can help you understand how the law applies to your particular contract, ensure the writing accurately reflects the deal, and navigate the proper process if a dispute arises.
Contact Us Today!
Contact a lawyer at the Elliott Law Group, PC today for a review of any agreement in Pennsylvania.
