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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



Opinion No. 6623

July 24, 1989


Enforceability of provisions for subcontracts with minority and woman-owned businesses

Contract provisions in a state contract requiring the prime contractor to enter into subcontracts with minority owned businesses and woman-owned businesses are not enforceable in light of Michigan Road Builders Ass'n v Milliken, 834 F2d 583 (CA6 1987), aff'd sub nom Milliken v Michigan Road Builders Ass'n, -- US --; 109 SCt 1333; 103 Led2d 804 (1989).

Shelby P. Solomon


Department of Management and Budget

Lewis Cass Building

Lansing, MI 48909

You have requested my opinion concerning the impact of the decision of the United States Supreme Court in Michigan Road Builders Ass'n v Milliken 834 F2d 583 (CA6 1987), aff'd sub nom Milliken v Michigan Road Builders Ass'n, --- US ----; 109 SCt 1333, 103 Led2d 804, (1989), on the ability of the state to enforce contractual provisions against prime contractors secured in furtherance of the 1980 PA 428, MCL 450.771 et seq; MSA 3.540(51) et seq. The decision in Milliken held MCL 450.771 et seq; MSA 3.540(51) et seq, which required a set-aside of a portion of state contracts for minority-owned businesses and woman-owned businesses, to be unconstitutional as violative of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. You ask whether the state may enforce contractual provisions requiring prime contractors to subcontract with minority-owned businesses and woman-owned businesses in instances where prime contractors refuse to enter into such contracts.

The general rule in Michigan is that contracts and/or contractual provisions that violate constitutional or statutory provisions are illegal and unenforceable in the courts. This general rule is explained in Jones v Chennault, 323 Mich 261, 267; 35 NW2d 256 (1948), and in a long line of Michigan cases, as follows:

" 'It is well settled that the law will not aid either party to an illegal agreement. It leaves the parties where it finds them. Neither a court of law or equity will aid the one in enforcing it, or give damages for breach of it, or set it aside at the suit of other, or, when the agreement has been executed in whole or in part by the payment of money or the transfer of property, lend its aid to recover it back.' " (Quoting from Benson v Bawden, 149 Mich 584, 587; 113 NW 20 (1907).)

See also Mancourt-Winters Coal Co v Ohio & Michigan Coal Co, 217 Mich 449, 455; 187 NW 408 (1922), Graves v Jones, 252 Mich 446, 449; 233 NW 375 (1930), and Kukla v Perry, 361 Mich 311, 324-325; 105 NW2d 176 (1960).

This general rule of contract law applies to all contracts executed on or after March 6, 1989, that require compliance with the provisions of 1980 PA 428. It also applies to state contracts containing mandatory subcontracting provisions that were executed prior to March 6, 1989 where prime contractors have not yet entered into the required subcontracts and refuse to do so. Courts will not enforce these contractual obligations against prime contractors in view of the Supreme Court's decision in Milliken.

It is my opinion, therefore, that contractual provisions in state contracts which impose a mandatory requirement that the prime contractor enter into subcontracts with minority-owned businesses or woman-owned businesses are no longer valid and enforceable in light of the decision of the United States Supreme Court in Milliken and, accordingly, such provisions may not be enforced against prime contractors who have failed to enter into contracts with minority and women-owned businesses.

Frank J. Kelley

Attorney General

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