If Mistaken Contract Lasts Long Enough, It Becomes Binding

The agreement between Millcreek Township, Pennsylvania and the Millcreek Township Police Association contains provisions governing the pensions paid police officers. Among those provisions was a clause calling for a five percent employee contribution. The clause contained an exception that the employee contribution could be reduced owing to the financial state of the pension system, but contained no corresponding clause allowing the employee contribution to be increased.

An arbitrator found that there was little question but that the pension clause in the contract did not conform with a memorandum of agreement between the parties concerning pension contributions. Under the MOA, the Township would have had the ability to increase its pension contribution to eight percent.

Nonetheless, the Arbitrator found that without regard to whether the parties made a mistake when they wrote the contract language, the passage of time only allowed one result – the contract should be construed to set a five-percent cap on employee contributions. As the Arbitrator viewed it, the fact that the parties had negotiated three successive contracts without addressing the “error” deprived the Township of the opportunity to now correct any mistake which had been made.

The Arbitrator believed that the Township either knew or should have known of the mistake, and that its failure to bargain for a correction of the mistake deprived it of the ability to change the language through the grievance procedure. The Arbitrator ordered the Township to reduce the employee contribution rate from eight percent to five percent.

Millcreek Township, Pennsylvania, LAIG 6530 (Minnich, 2007).

This article appears in the January 2008 issue