Court Opinion

ID: 9420065
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:52:46.911901+00
Date Added: 2024-06-11T17:22:22.161950
License: Public Domain

Mr. Justice Black,
with whom Mr. Justice Murphy agrees,
dissenting.
The Court today invokes elusive and uncertain principles of “general contract law” to strike down a clause in a government contract executed under the recognized congressional authority of the Lend-Lease Act. Without reliance upon any indication of congressional policy, the Court assumes that it can discover somewhere a “general contract law,” and that it is empowered to apply this law to wartime contracts of the Federal Government. I regard the decisions of this Court since Erie R. Co. v. Tompkins, 304 U. S. 64, as having established that the construction and validity of all government contracts are governed by federal law, whether executed under authority of the Lend-Lease Act or any other. Metropolitan Bank v. United States, 323 U. S. 454, 456; see United States v. Allegheny County, 322 U. S. 174, 183; Clearfield Trust Co. v. United States, 318 U. S. 363. And Congress has enacted many laws, both general and specific in nature, to guide all contracting agents of the Federal Government, 41 U. S. C. §§ 1 et seq., as well as many detailed rules applicable solely to certain categories of contracts. See, e. g., Merchant Marine Act of 1936, 49 Stat. 1985, Titles V, VII, VIII. But I can find no act of Congress which expressly or impliedly prohibits such generally authorized agents from making a contract containing a liquidated damage provision such as here involved. *415Nor has Congress ever intimated that contracts within the general powers of government agents should be invalidated by this Court’s invocation of a nebulous “general contract law,” or because such contracts failed to harmonize with this Court’s views of what is “fair and reasonable.” I had not supposed that the federal courts were vested with such supervisory and revisory powers over the terms of contracts voluntarily and advisedly entered into by business groups with congressionally authorized government agents.
The available indications of congressional policy point to the very opposite conclusion. Far from indicating a hostility to liquidated damage clauses, Congress has made it mandatory that such clauses to protect against delay in performance be inserted in all government building contracts; and it has provided that such clauses “shall be conclusive and binding upon all parties” without the necessity for the Government to prove “actual or specific damages sustained ... by reason of delays . . . .” 32 Stat. 326; 40 U. S. C. § 269. Surely this provision would not permit federal judges to ignore liquidated damage clauses in building contracts because actual damages were not proved and could not have been reasonably forecast. And in no other act of Congress is there a suggestion that liquidated damage provisions in other government contracts are unenforceable because the courts believe no actual damages could be sustained from a breach. Yet the majority adopts such a principle today to invalidate a clause in this contract, and thereby, as I see it, embarks upon the very undesirable practice of supervising and revising the congressionally authorized conduct of federal contracting agents. This Court has previously refused to initiate such a practice in a case where the Government on most appealing grounds urged us to revise its agent’s contract. United States v. Bethlehem Steel Corp., 315 U. S. 289, 308-309.
*416In this case procurement officers of the Federal Government, admitted^ acting within their authority, advertised for bids for the sale of dried eggs which the advertisement provided were to be ready for delivery to the Government on a date to be chosen by the bidder. Actual delivery of the eggs was to be made on the Government’s demand any time within a ten-day period following the ready date named by the bidder. The advertisement also contained a provision for the assessment of liquidated damages for delay in delivering the eggs or in having them inspected, certified, and ready for delivery by the bidder’s chosen date.
The efficient integration of a large-scale procurement program, such as was here involved, made it highly advisable for the Government to exact assurances that goods would be ready for delivery in advance of selection of the date for actual delivery. Essential to the program was the coordinated movement of boxcars and ships, both of which were then scarce and in great demand. Each day’s idleness of cars and ships might mean injuries to the Government of large but uncertain amounts. Under such circumstances it would have been a serious omission for government agents to fail to check and double check, contract and double contract, in order to have goods ready for delivery to cars and ships with the least possible lost time in the use of transport facilities. And the Government had a right to depend on its contractors living up to their promise to have goods ready on the date they said they would so that the Government might thereafter select a delivery date with certainty that no transportation delays would occur. Failure to do so might well disrupt the Government’s prearranged train and ship schedules, causing it cumulative difficulties not easily translated into money damages. And all of these damages might result from failure to have the goods ready as promised, even *417though the contractor might later be able to deliver when called for and thus escape the delivery liquidated damage provision.
This contract was made at arm’s length. The petitioner knew of the necessity for faithful performance of its obligations. It undoubtedly gave consideration to this fact and fixed its price high enough to satisfy itself of its profits. I can think of no persuasive reason why it should now be relieved of the obligation it advisedly assumed which was, in effect, to charge less for its goods if they were not ready for delivery on the date it promised. I do not deny that this Court can fill gaps in statutes so as to execute broad congressional purposes and that courts generally have made large contributions to laws governing contracts. But I think that the Court here makes a law which frustrates congressional purposes and tends most unwisely to handicap government purchasing agents in the performance of their authorized duties. I adhere to the belief that it is unwise for the courts to interfere with the making of contracts by government agents in harmony with valid congressional authority. Perkins v. Lukens Steel Co., 310 U. S. 113, 127-128, 131-132. I would affirm this judgment.