George A. Fuller Co. v. United States
108 Ct. Cl. 70, 69 F. Supp. 409 (1947)
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Rule of Law:
In every contract, there is an implied duty that neither party will hinder or delay the other's performance. A party that breaches this duty by causing a delay is liable for damages, unless the contract contains an express provision exempting it from such liability.
Facts:
- George A. Fuller Co. entered into a contract with the United States to construct the Archives Building in Washington, D.C.
- Under the contract, the U.S. government was obligated to furnish models for the ornamentation of various materials used in the building's construction.
- The government failed to furnish the models for granite, limestone, plaster, bronze, and glass in a timely manner.
- The government's delay in providing the models ultimately delayed the final completion of the project by six months.
- The contract did not contain a provision expressly making the government liable for damages it caused through delay.
- The contract also lacked a provision expressly exempting the government from liability for delays it caused.
Procedural Posture:
- George A. Fuller Co. (plaintiff) filed a lawsuit against the United States (defendant) in the U.S. Court of Claims, the court of first instance for this type of claim.
- The plaintiff sought damages for delays it alleged were caused by the government's failure to furnish models on time, make changes promptly, and approve limestone.
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Issue:
Does the government breach a contract and become liable for damages when it hinders or delays a contractor's performance by failing to meet its own obligations, if the contract does not contain an express provision making it liable for such delays?
Opinions:
Majority - Whitaker, J.
Yes. The government is liable for damages caused by its delay in performing its contractual obligations. It is an implied provision of every contract that neither party will do anything to hinder or delay the other's performance, and a breach of this provision gives rise to liability for damages. The court reasoned that this principle is well-established in precedent from both the Supreme Court and the Court of Claims. The government's failure to furnish models on time was a breach of this implied duty. The court distinguished this case from those where the government was exempted from liability, noting those cases involved contracts with express 'no-damages-for-delay' clauses. Furthermore, Article 9 of the contract, which allows for an extension of time, relates only to waiving liquidated damages against the contractor and does not absolve the government of its own liability for causing the delay. The court also noted that the board that drafted the standard government contract form did not intend for it to shield the government from damages for delays it caused.
Analysis:
This decision solidifies the principle of an implied covenant of non-hindrance in government contracts. It clarifies that standard clauses granting time extensions for delays do not serve as a waiver of a contractor's right to recover damages for government-caused delays. The ruling places the burden on the government to explicitly include a 'no-damages-for-delay' clause if it wishes to avoid such liability, thereby allowing contractors to properly assess and price this risk into their bids. This precedent is crucial for distinguishing between delays caused by a failure to perform a basic obligation versus delays stemming from the exercise of a contractually reserved right, such as making changes to the work.
