From the syllabus of the Kansas Court of Appeals in Jayhawk Racing vs. City of Topeka…
6. Municipal corporations have dual capacities—governmental and proprietary. In the governmental capacity, they serve as an arm of the state and are sovereign. In the proprietary capacity, they exercise powers as any corporation does.
7. To procure what is needed for public improvements, cities contract with those people and companies that sell what is needed to do the job. When cities act in such a capacity, their actions are proprietary and are governed by the same legal rules that would govern a private corporate transaction.
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13. If a contract entered into by a city’s governing body involves the exercise of the city’s business or proprietary powers, the contract may extend beyond the term of the contracting governing body and is binding on successor governing bodies if, at the time the contract was entered into, it was fair and reasonable and necessary or advantageous to the municipality. If the contract, however, involves the legislative functions or governmental powers of the city, the contract is not binding on successor boards or councils.
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15. The Kansas Cash-Basis Law makes it unlawful for the governing body of any municipality to create any indebtedness in excess of the amount of funds actually on hand in the treasury of such municipality at the time for such purpose unless provision has been made for payment by the issuance of bonds.