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DJ Manufacturing Corp. v. United States

United States Court of Appeals for the Federal Circuit
86 F.3d 1130 (1996)


DJ Manufacturing Corporation (DJ) (plaintiff) entered into a contract with the United States (government) (defendant), under which DJ would provide combat field packs to troops participating in Operation Desert Storm. Under the contract, liquidated damages would be assessed at one-fifteenth of 1 percent of the contract price for each day that delivery of an article was delayed past the specified delivery deadline. DJ missed several delivery deadlines. The government withheld payment of approximately $663,000, which represented a reduction of about 8 percent from the total contract price. DJ sued the government to recover the withheld amount, arguing that the contract’s liquidated damages clause was an unenforceable penalty. Both parties moved for summary judgment. DJ presented an affidavit from its president stating that the contract’s liquidated-damages rate was a standard rate used in many government contracts rather than a rate selected specifically for the parties’ contract. The government’s contracting officer stated that the liquidated damages clause was included in the contract because of the need to move war-related items such as DJ’s combat field packs into the possession of troops as soon as possible. The United States Court of Federal Claims entered summary judgment in favor of the government. DJ appealed.

Rule of Law


Holding and Reasoning (Bryson, J.)

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