United States v. Spearin

Background

A private contractor agreed to build a dry-dock for the Navy using plans and specifications the Government supplied. The plans required relocating a 6-foot sewer, and the contractor followed those specifications. After relocation, a hidden obstruction (a dam) in a connected 7-foot city sewer caused water pressure that broke the new 6-foot sewer and flooded the excavation. The dam did not appear on the city’s or Government’s plans. The contractor had made only a superficial site check and had no specific knowledge of the dam. He warned the Government, who refused to accept responsibility; after fifteen months the Secretary of the Navy annulled the contract and finished the dry-dock under changed plans.

Reasoning

The central question was whether the Government could cancel the contract when its own plans proved defective. The Court explained that when an owner provides detailed plans and specifications, the contractor who follows them is not responsible for defects in those plans. The specific provision for the sewer amounted to an implied warranty the specified work would be adequate. General contract clauses requiring site checks did not shift that risk to the contractor. Because the Government repudiated responsibility and then annulled the contract without justification, it became liable for the contractor’s losses. The Court of Claims’ award, including anticipated profit, was upheld.

Real world impact

The decision means that government agencies and other owners who supply detailed plans can be held responsible if those plans are defective. Contractors who follow supplied specifications may refuse unsafe work and can recover damages if an owner wrongfully cancels the contract. The Court affirmed the monetary judgment awarded to the contractor for expenditures and lost profit.