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If states sign bad contracts with for profit prison firms, should they still have to pay for profit prison companies if they have no prisoners to send to them?

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Colin Cavendish-Jones, Ph.D. eNotes educator | Certified Educator

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For the purposes of this question, I shall assume that a bad contract means one which contains provisions that the state must pay a certain sum, perhaps based on full or substantial occupancy of the prison facility, regardless of whether any prisoners are in fact sent there. This could obviously cost the state a lot of money without any accompanying benefit, or it might mean that the state pays an egregiously high sum for minimal service.

The answer to this question, so long as the contract is legally valid, is yes. The common law of the state in question will apply to the contract, and the state will be in the same position as an individual who signed such a contract.

It is trite law that the courts will not void a contract on the basis that one of the parties has made a bad bargain, or even look into whether the bargain was a bad one or not. So long as there has been some consideration, and the contract has been validly executed by parties who had actual or ostensible authority to enter into it, any payment due under the contract must be paid. Although there may well be public anger at the state making a bad bargain and wasting taxpayers’ money (as has been the case in recent disputes involving the Florida Department of Corrections and Corrections Corporation of America, see attached article from Prison Legal News), it would clearly be contrary to the demands of public policy to allow states to renege on a contract simply because they made a bad deal.

This is a moral position as well as a legal one. The state is responsible for ensuring that public money is spent wisely. It is not the responsibility of those from whom the state procures goods and services to ensure that the state's interests are defended.

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