Opinion ID: 207966
Heading Depth: 1
Heading Rank: 12

Heading: The All Reasonable Means Issue

Text: Plaintiff Districts and the Government dispute whether Reclamation, in dealing with the water allocations in the years at issue, complied with the opening phrase of Article 9(a) that the United States will use all reasonable means to guard against a condition of shortage in the quantity of water available to the Contractor pursuant to this contract. Whether that language actually adds anything to the Government's obligations under the contracts is an open question. Surely both parties to the contracts have a common law duty to perform their contractual duties fairly and in good faith. A covenant of good faith and fair dealing is implied [in] all contracts. The covenant imposes on a party ... the duty ... to do everything that the contract presupposes should be done by a party to accomplish the contract's purpose. 30 Richard A. Lord, Williston on Contracts § 77.10 (4th ed. 1999). Furthermore, as a matter of law, a government agency is obligated to not act in a manner that is arbitrary or capricious. See Administrative Procedure Act, 5 U.S.C. § 706(2)(A). Whether that amounts to an obligation to use all reasonable means to perform its contracted duties is an interesting question. The simple answer to this apparent conundrum is that on these facts it is of little, if any, consequence. Let us assume, as the Government insists and the plaintiffs deny, that Reclamation used all reasonable means to avoid shortages under the circumstances in which it found itself Reclamation was unable to both comply with the new allocation priorities and its contractual obligations, so it reasonably under the circumstances chose to breach the contracts. Does that provide a defense to its breach of the contracts? The short answer is no. The abstract question of whether Reclamation used all reasonable means to avoid breaching the contracts is beside the pointa reasonable breach of contract is nonetheless a breach. Let us assume the alternative except for the two years 1994 and 1995, the Government did not use all reasonable means to avoid shortages. [38] Does that add anything to the conclusion that there was a breach of contract, or to the conclusion that the Government's defenses to that breach are unavailing? Absent a showing that punitive damages are warrantednot present in this casethe moral basis for liability generally is irrelevant to contract damages.