Can a Tennessee county school board approve a non-binding memorandum of understanding for a school turnaround partnership that isn't yet allowed by law?

Plain-English summary

The Commissioner of Education proposed that the Hamilton County School Board vote on a memorandum of understanding (MOU) reflecting interest in a possible "partnership district" arrangement among the Tennessee Department of Education, the school board, and a private company to help priority (low-performing) schools in Hamilton County. The catch: current law did not provide for the partnership. The commissioner planned to seek legislation, but wanted the vote first. Representative JoAnn Favors asked whether the board could legally vote on the MOU.

The AG said yes, as long as the MOU is drafted to be explicitly non-binding. A memorandum of understanding (or "letter of intent") is by definition "a noncommittal writing preliminary to a contract" (Black's Law Dictionary, 8th ed.). It does not commit the parties to anything. Tennessee courts will not enforce an MOU as a binding contract when its terms unequivocally state it is non-binding. Barnes & Robinson Co. v. Onesource Facility Servs., 195 S.W.3d 637, 645 (Tenn. Ct. App. 2006), is the leading cite.

If a school board approves a non-binding MOU, it is just expressing interest in a potential future partnership, contingent on legislation enabling the partnership and on negotiation of a suitable contract. The MOU does not bind the board to do anything currently unlawful, and an affirmative vote does not block the board from pursuing other options later. Nothing forbids a school board from expressing interest in a method of improving education that differs from currently authorized methods.

The opinion noted (APCO Amusement Co. v. Wilkins Family Restaurants, Inc.) that courts will sometimes enforce an MOU as a binding contract when there is clear evidence of intent to be bound. So careful drafting matters; the document should be unambiguously non-binding to avoid enforcement risk.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule mentioned here.

Background and statutory framework

Tennessee's "priority schools" framework targets the bottom-five-percent of schools by academic performance. The proposed partnership district concept (sometimes called the iZone+ or partnership model) involves a tri-party arrangement: the state, the local school board, and a private operator. This model was not statutorily authorized at the time of the opinion request, but the Department of Education was preparing to seek legislative authorization.

The non-binding MOU mechanism. An MOU is a standard preliminary instrument. Black's Law Dictionary defines it as "a noncommittal writing preliminary to a contract." Tennessee courts treat MOUs and letters of intent interchangeably. Barnes & Robinson Co. v. Onesource Facility Servs. held that "unequivocal non-binding language" in a letter of intent precludes enforcement as a contract; if the letter of intent is conditioned on the execution of a subsequent contract, it is not binding.

Why a school board can vote on a non-binding MOU about non-existent authority. Voting to express interest is not the same as exercising authority. The board is not committing to enter the contemplated partnership; it is expressing what it would consider if and when state law allowed. The vote does not commit money, transfer authority, or affect the board's existing legal duties. If the partnership-enabling legislation passes, the board can then enter a contract within its authority. If the legislation does not pass, the MOU expires by its own terms (or as a matter of contract law lack of legal capacity).

Drafting caution. APCO Amusement Co. (1984) is a reminder that an MOU can be treated as binding if there is clear evidence the parties intended to be bound. A document titled MOU that contains specific commitments to act, terms of consideration, or operative covenants might be enforceable as a contract. The drafter should use unequivocal non-binding language and condition any future obligations on subsequent contract formation.

Common questions

Q: Can a Tennessee school board vote on an MOU about a school program that isn't yet legally authorized?
A: According to this opinion, yes, as long as the MOU is explicitly non-binding. The vote expresses interest; it does not commit the board to unlawful action.

Q: What makes an MOU non-binding?
A: Unequivocal language stating it is non-binding, conditional language tying any obligations to a subsequent contract, and absence of specific operative commitments. Barnes & Robinson Co. v. Onesource Facility Servs. is the standard cite.

Q: Can an MOU ever become enforceable?
A: Yes. APCO Amusement Co. v. Wilkins Family Restaurants, Inc. shows that courts can enforce an MOU as a binding contract when there is clear evidence of intent to be bound. Careful drafting matters.

Q: Does voting on an MOU commit the board to anything?
A: According to this opinion, no, if the MOU is non-binding. The vote is an expression of interest. The board remains free to pursue or not pursue the contemplated arrangement once the legal framework exists.

Q: What's a "priority school" in Tennessee?
A: The opinion describes priority schools as low-performing schools, the focus of the proposed turnaround partnership. It did not set out the eligibility formula; check the current Department of Education priority-school rules for the precise threshold.

Citations and references

Cases:
- APCO Amusement Co. v. Wilkins Family Restaurants, Inc., 673 S.W.2d 523 (Tenn. Ct. App. 1984)
- Barnes & Robinson Co. v. Onesource Facility Servs., 195 S.W.3d 637 (Tenn. Ct. App. 2006)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2017/op17-042.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
September 21, 2017
Opinion No. 17-42
Legality of County School Board Vote on a Non-binding Memorandum of Understanding with Regard to Partnering with a Private Company to Assist Low-performing Schools

Question 1
May a county board of education vote on a non-binding memorandum of understanding regarding the potential formation of a "partnership district" that would allow the Tennessee Department of Education, the county school board, and a private company to collaborate to improve education for students in certain "priority schools" (i.e., low-performing schools) even though current law does not provide for such a partnership?

Opinion 1
Yes.

ANALYSIS

The request for this opinion was based on the following premises: The Commissioner of Education has proposed that the Hamilton County School Board vote on a memorandum of understanding that would reflect the School Board's interest or lack of interest in potentially pursuing an agreement among the Tennessee Department of Education, the School Board, and a private company to form a "partnership district" to improve education for students in certain "priority schools" (i.e., low-performing schools) in Hamilton County. Current law does not provide for such a partnership. The Commissioner plans to seek legislation that would allow for the proposed partnership, but the vote on the memorandum of understanding would take place before any such change in the law.

The analysis is, accordingly, based on those premises and on the additional assumption that the memorandum of understanding will be drafted to be explicitly non-binding.

A memorandum of understanding — a term used interchangeably with "letter of intent" — generally is not an enforceable contract. [Footnote 1: Courts will sometimes enforce a memorandum of understanding as a binding contract if there is clear evidence that the parties intended to be bound by it. See, e.g., APCO Amusement Co. v. Wilkins Family Restaurants, Inc., 673 S.W.2d 523 (Tenn. Ct. App. 1984).] Indeed, it is by definition "a noncommittal writing preliminary to a contract." Black's Law Dictionary 924 (8th ed. 2004). Since a memorandum of understanding is not meant to be binding, it does not commit the parties to any particular course of action or hinder the parties from pursuing other courses of action or other arrangements with third parties. Id.

In particular, courts will not view as binding a memorandum of understanding that explicitly states that it is not binding. See, e.g., Barnes & Robinson Co. v. Onesource Facility Servs., 195 S.W.3d 637, 645 (Tenn. Ct. App. 2006) (citing with approval cases holding that, as a matter of law, parties cannot rely on the existence of a contract if a letter of intent contains "unequivocal non-binding language," and that if the letter of intent is conditioned on the execution of a subsequent contract the letter of intent is not binding.)

Thus, if a school board were to approve a non-binding memorandum of understanding regarding the proposed partnership it would not be entering into a contract or committing itself to enter into a contract that is currently not permitted under the law. It would merely be expressing its interest in a potential partnership — contingent on a change in the law and on the successful negotiation of a suitable contract should the contingency materialize. Moreover, an affirmative vote on such a non-binding memorandum of understanding would not prevent the school board from pursuing other courses of action or other arrangements at any time.

Nothing prohibits a school board from expressing potential interest in a method of improving education that may differ from methods currently available under existing law. Because an affirmative vote on a non-binding memorandum of understanding would be nothing more than an expression of a potential interest and would not hinder a school board from complying with current law, a school board may vote on such a non-binding memorandum of understanding.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

Requested by:
The Honorable JoAnn Favors
State Representative
35 Legislative Plaza
Nashville, Tennessee 37243