Does a Contract In Corporation Business Require Board Approval and Should It Be Written ?

In Bleck v. Cosgrove, 32 Ill. App. 2d 267, 177 N.E.2d 647 (1961), the president of a country club that was on the verge of insolvency allegedly entered into an oral lease with a tenant who lived in the clubhouse, to extend the term of his one-year written lease for an indefinite number of years in exchange for capital improvements to the property that the tenant made at his own expense in the amount of $ 2,500. The tenant's written lease expired in 1958, and the tenant continued to live in the clubhouse (presumably rent free) until as late as 1961. The Court affirmed the trial court's decision on the pleadings and held that, as a matter of law, the oral lease was unusual and extraordinary such that the president lacked the authority to bind the country club to its terms. The court noted that previous leases had all been made in writing, for finite and discernable periods of time, and had been authorized by the board of directors of the country club. Bleck, 32 Ill. App. 2d at 278; See also Sacks, 340 Ill. App. at 89 (a contract to give an employee, as part of his or her compensation, an interest in the corporation's business or its profits was unusual or extraordinary so as to require board approval).