Void or Rescind a Vote

[Guest Holly]

If the board votes to approve a contract and then gets a better bid, or decides they no longer need the contract, can the board void or rescind the approval? If so, how? Similarly, what happens if a board approved  payment of something they weren't authorized to approve per their bylaws. How do they fix it if money was paid out? How do the document the error?

[Joshua Katz]

On 12/22/2023 at 12:25 PM, Guest Holly said:

If the board votes to approve a contract and then gets a better bid, or decides they no longer need the contract, can the board void or rescind the approval?

Let's be clear about one thing from the start: none of this has to do with the law, just with procedure. Procedures can allow people to do illegal things. So saying the board "can" void something doesn't mean it won't be sued for doing so.

That said, the unexecuted portion of a motion may be rescinded, but the executed portion may not. Having entered into a contract executes the motion.

On 12/22/2023 at 12:25 PM, Guest Holly said:

Similarly, what happens if a board approved  payment of something they weren't authorized to approve per their bylaws.

The board acted beyond its authority and is responsible for the costs.

On 12/22/2023 at 12:25 PM, Guest Holly said:

How do they fix it if money was paid out?

The board will have to repay the society. 

[Atul Kapur]

On 12/22/2023 at 12:25 PM, Guest Holly said:

can the board void or rescind the approval? If so, how?

If the board voted to sign a contract with A and now wants to go with B instead, it depends on whether the contract with A has been signed already. If the contract hasn't yet been signed, the board can rescind the original motion.

If the contract has been signed, then the board needs to adopt a new motion to cancel the contract with A.

As @Joshua Katz said, this just deals with the procedure within the board and not with any legal or other action A may take against the organization.

On 12/22/2023 at 12:25 PM, Guest Holly said:

board approved  payment of something they weren't authorized to approve per their bylaws. How do they fix it if money was paid out?

 

On 12/22/2023 at 12:31 PM, Joshua Katz said:

The board will have to repay the society

Well, the board could first ask the body that is authorized to approve such a payment (most likely the membership) to ratify the action of making the payment. If the motion to ratify is defeated, then those individuals on the board who voted to make the payment are responsible for repaying the organization.

On 12/22/2023 at 12:25 PM, Guest Holly said:

How do the document the error?

You document exactly what happened, without editorializing. The board minutes record the motions and what happened to them (adopted, defeated, etc).

The general meeting minutes would record the motion to ratify and its fate. 

[Rob Elsman]

The way the original post was presented leads me to think that what is really needed is professional, legal advice from an attorney who is familiar with contract law.

[Tomm]

On 12/22/2023 at 10:48 AM, Atul Kapur said:

If the motion to ratify is defeated, then those individuals on the board who voted to make the payment are responsible for repaying the organization.

If the board is protected by an indemnification clause in the bylaws would they be protected or still responsible to pay?

[Rob Elsman]

You will need to contact an attorney about questions related to indemnification clauses.

[Josh Martin]

On 12/22/2023 at 5:20 PM, Tomm said:

If the board is protected by an indemnification clause in the bylaws would they be protected or still responsible to pay?

Mr. Katz's response involved whether, as a parliamentary matter, the board members are required to repay the unauthorized expenses (unless, of course, the society ratifies them).

Whether the board members are legally obligated to repay the unauthorized expenses (with or without an indemnification clause) is a question for an attorney.

[Shmuel Gerber]

On 12/23/2023 at 9:52 AM, Josh Martin said:

Mr. Katz's response involved whether, as a parliamentary matter, the board members are required to repay the unauthorized expenses (unless, of course, the society ratifies them).

I don't think parliamentary procedure says anything about whether board members are required to repay things. It simply recognizes that a board has no more authority than it is given by the governing documents, and that members of an assembly who vote in favor of something assume responsibility for that thing if their vote prevails. 

[Josh Martin]

On 12/24/2023 at 11:03 AM, Shmuel Gerber said:

I don't think parliamentary procedure says anything about whether board members are required to repay things. It simply recognizes that a board has no more authority than it is given by the governing documents, and that members of an assembly who vote in favor of something assume responsibility for that thing if their vote prevails. 

Would perhaps a more accurate statement be that, in such circumstances, the society may order the board members to repay the unauthorized expenditures?

[Shmuel Gerber]

On 12/24/2023 at 3:24 PM, Josh Martin said:

Would perhaps a more accurate statement be that, in such circumstances, the society may order the board members to repay the unauthorized expenditures?

Without disciplinary proceedings, I don't think the society can “order” the board members to repay unauthorized expenditures in the same way that it can order the treasurer to issue a check, or the secretary to issue a meeting notice. But the society can demand such payment the same way it can demand something from anyone who owes it money.

The society can determine that the action taken was outside the board's authority and therefore the board members are personally responsible. And then if the board members don't want to pay, the society can attempt to force the issue, either through legal proceedings or an internal disciplinary process.

My quibble is not with whether the board members may have to pay or do have to pay, but I'm just not thrilled with your proposed distinction between parliamentary requirements and legal obligations. There may always be legal considerations regarding the real-world ramifications of decisions made in a meeting; parliamentary procedure is merely concerned with how those decisions are validly made, and does not itself impose financial obligations.

But it is true that RONR makes mention in several places of incurring monetary obligations, such as:

• "It is different with members who have not paid their dues up to the date of sending in their resignations. Until they have settled their dues, the society is under no obligation to accept their resignations, and thus additional amounts may become due." (32:8)

• "Members cannot be assessed any additional payment aside from their dues unless it is provided for in the bylaws." (56:19)

• "Punishments that a society can impose generally fall under the headings of censure, fine (if authorized in the bylaws), suspension, or expulsion. The extreme penalty that an organization or society can impose on a member is expulsion." (62:1)

• "The usual possible penalties for an officer are censure or removal from office, although in special circumstances others may be appropriate (for example, to repay into the society's treasury funds that the officer has been found guilty of misappropriating, perhaps with an added fine)." 63:33(f)

But I think those are just useful provisions for a society to have, usually arising out of the nature of bylaw provisions, and not really matters of parliamentary procedure per se.

 

[Atul Kapur]

On 12/24/2023 at 6:20 PM, Shmuel Gerber said:

My quibble is not with whether the board members may have to pay or do have to pay, but I'm just not thrilled with your proposed distinction between parliamentary requirements and legal obligations. There may always be legal considerations regarding the real-world ramifications of decisions made in a meeting; parliamentary procedure is merely concerned with how those decisions are validly made, and does not itself impose financial obligations.

In my mind, the closest analogy in RONR was the phrase "at their own risk" in 40:9

Quote

If, instead, the members present take action informally in the absence of a quorum, they do so at their own risk.

 

[Shmuel Gerber]

On 12/24/2023 at 6:35 PM, Atul Kapur said:

In my mind, the closest analogy in RONR was the phrase "at their own risk" in 40:9

Quote

If, instead, the members present take action informally in the absence of a quorum, they do so at their own risk.

 

Right. If members decide to do something on their own when they have no valid power to act for the organization, they are responsible for what they've done. Although in most cases, I'm not so sure that the primary risk isn't borne by those who actually carry out the decision. But maybe that is a legal question rather than a parliamentary one. 🙂 

[Josh Martin]

On 12/24/2023 at 5:20 PM, Shmuel Gerber said:

The society can determine that the action taken was outside the board's authority and therefore the board members are personally responsible. And then if the board members don't want to pay, the society can attempt to force the issue, either through legal proceedings or an internal disciplinary process.

My quibble is not with whether the board members may have to pay or do have to pay, but I'm just not thrilled with your proposed distinction between parliamentary requirements and legal obligations. There may always be legal considerations regarding the real-world ramifications of decisions made in a meeting; parliamentary procedure is merely concerned with how those decisions are validly made, and does not itself impose financial obligations.

Thank you for the clarification.

Edited December 25, 2023 at 04:08 PM by Josh Martin