Thus, the Court of Federal Claims determined that FRA's contractual obligation to secure insurance endorsements on MBTA's behalf was excused under the doctrine of impossibility. On appeal, MBTA suggests that the doctrine of impossibility applies only if the impossibility was beyond FRA's control and if it occurred without fault or negligence of FRA, citing Jennie-O-Foods, Inc. v. United States, 217 Ct.Cl. 314, 580 F.2d 400, 404 (1978), and International Electronics Corp. v. United States, 227 Ct.Cl. 208, 646 F.2d 496, 509 (1981). MBTA also argues that all relevant circumstances at the time of contracting were under FRA's control and that FRA was negligent when it insisted on inserting section 222(c) in the contract, rather than an indemnification clause as MBTA initially requested, without first checking to see whether such endorsements would be obtainable.
Plaintiff first seeks a ruling that the liquidated damages clause in its contract with the Coast Guard is unenforceable. Liquidated damages are used "to allocate the consequences of a breach before it occurs," Jennie-O Foods, Inc. v. United States, 580 F.2d 400, 412 (Ct. Cl. 1978) (per curiam), which "save[s] the time and expense of litigating the issue of damages," DJ Mfg. Corp. v. United States, 86 F.3d 1130, 1133 (Fed. Cir. 1996). Liquidated damages "serve a particularly useful function when damages are uncertain in nature or amount or are unmeasurable, as is the case in many government contracts."
B. Enforceability of Liquidated Damages Clauses Plaintiff first seeks a ruling that the liquidated damages clause in its contract with the Coast Guard is unenforceable. Liquidated damages are used "to allocate the consequences of a breach before it occurs," Jennie-O Foods, Inc. v. United States, 580 F.2d 400, 412 (Ct. Cl. 1978) (per curiam), which "save[s] the time and expense of litigating the issue of damages," DJ Mfg. Corp. v. United States, 86 F.3d 1130, 1133 (Fed. Cir. 1996). Liquidated damages "serve a particularly useful function when damages are uncertain in nature or amount or are unmeasurable, as is the case in many government contracts."
B. Enforceability of Liquidated Damages Clauses Liquidated damages are used "to allocate the consequences of a breach before it occurs," Jennie-O Foods, Inc. v. United States, 580 F.2d 400, 412 (Ct. Cl. 1978) (per curiam), which "save[s] the time and expense of litigating the issue of damages," DJ Mfg. Corp. v. United States, 86 F.3d 1130, 1133 (Fed. Cir. 1996). Liquidated damages "serve a particularly useful function when damages are uncertain in nature or amount or are unmeasurable, as is the case in many government contracts."
Such clauses "serve a particularly useful function when damages are uncertain in nature or amount or are unmeasurable," Priebe Sons v. United States, 332 U.S. 407, 411 (1947), which is often the case when there is a delay in the completion of a contract for the government. Id.; United States v. Bethlehem Steel Co., 205 U.S. 105, 120 (1907); Jennie-O Foods, Inc. v. United States, 580 F.2d 400, 413 (Ct.Cl. 1978) ("Costs to the public convenience and the temporary thwarting of the public goals . . . are hard to measure with precision."). When damages are uncertain or difficult to measure, a liquidated damages clause will be enforced as long as "the amount stipulated for is not so extravagant, or disproportionate to the amount of property loss, as to show that compensation was not the object aimed at or as to imply fraud, mistake, circumvention or oppression."
Although such showings are perhaps indicative of the occurrence of some force majeure events and of skillful management of the supply of gas, they do not meet the requisite burden of proof to excuse performance and thus satisfy a force majeure defense to delivery. Brooks v. Calloway, 318 U.S. at 123, 63 S.Ct. at 476; Jennie-O Foods Inc. v. United States, 580 F.2d 400, 408 (Ct.Cl. 1978). The Commission distinguished the burden of proof imposed by the court in Jennie-O from this case because in Jennie-O, the contracting parties sought a permanent excuse from performance rather than temporary suspension.
Third, Warrior completed its contract, and the Navy accepted and used its targets. Fourth, and most significantly, it "was certainly possible to meet the performance requirements * * *" of plaintiff's contract, using a 60-foot long safety webbing assembly, for both MCA and the Navy (using Swift material) did so.See Jennie-O Foods v. United States, 217 Ct.Cl. 314, 330, 580 F.2d 400, 410 (1978); Astro Space Labs, Inc. v. United States, 200 Ct.Cl. 282, 300, 470 F.2d 1003, 1013 (1972). Plaintiff itself, some time after the termination of Contract 2410, made banners (using a 520 denier marquisette nylon, coated, material) which were successfully flight tested at Point Mugu. Moreover, plaintiff's industrial engineering manager testified that some targets with 420 denier material frayed less than 2 feet during April 1973 test flights.
By "subjective" commercial impracticability we refer to impracticability which is due to the inability of the particular promisor as opposed to "objective" commercial impracticability which arises from the nature of the promised performance itself. Jennie-O Foods, Inc. v. United States, 217 Ct.Cl. 314, 328-29, 580 F.2d 400, 409 (1978); Restatement of Contracts ยง 455 (1932). The trial judge found that even though Okay Industries had been able to produce magazines conforming to the 2 1/2-inch flatness requirement, plaintiff could not have done so without expenditures so extreme as to be commercially senseless and beyond plaintiff's reasonable capacity.
Further, "[t]here can be little sympathy for contractors who seek refuge behind the label of commercial senselessness (impracticability) without proof that they have made an effort to obtain performance in an alternative fashion." Oak Adec, 24 Cl.Ct. at 505-506 (citing Jennie-O Foods, Inc. v. United States, 217 Ct.Cl. 314, 328, 580 F.2d 400, 409 (1978)). "Whether performance of a particular contract" is commercially impracticable is a question of fact. Conner Bros. Constr. Co., Inc. v. United States, 65 Fed.Cl. 657, 687 (2005) (citing Jennie-O Foods, 580 F.2d at 409).
The contractor must prove that the industry as a whole found the specifications impossible. Id.See alsoJennie-O Foods, Inc. v. UnitedStates, 217 Ct.Cl. 314, 580 F.2d 400, 410 (1978); Foster Wheeler, 513 F.2d at 595. [C]ase law does support a requirement that the contractor demonstrate that the specifications were, from an objective point, incapable of performance.