The following article appeared in this month’s issue of FAR View – a newsletter put out by the Government Contracting students of Cal Poly Pomona’s Society of Law, Contracts and Procurement. If you are not already subscribed to this wonderful publication, simply send an email to firstname.lastname@example.org and just ask! And if you want to check out the current issue, just ask them or ask me – I’ll send it to you. Just go to www.ask-tom-reid.com and post the request.
There is a principle of government contract law referred to as the Christian Doctrine. When I teach this in a class I typically joke that it is the principle that states that defaulting contractors will be fed to the lions. But in reality it has nothing to do with lions, or Christians, or eating. It is the principle that tells us when a clause, having been omitted from the contract, might be “read into” the contract by operation of law – often to the great surprise of the contractor.
The doctrine gets its name from the seminal case in the area captioned G.L. Christian & Associates v. US, 312 F.2d 418 (Ct. Cl. 1963); rehearing denied, 320 F. 2d 345 (Ct. Cl. 1963); cert denied, 375 U.S. 954 (1964). The contract in question was awarded by the New Orleans Corps of Engineers for construction work in the area. There is a hint that the Termination for Convenience clause was actively negotiated out of the contract by the contractor. When a new contracting officer arrived, however, and it was determined that the services were no longer needed, a termination for convenience issued. Mr. Christian argued that without the clause, a termination was such an extraordinary act that the government had no right to terminate and as a result he would be entitled to recover full commercial damages for breach of the contract. These damages would include all consequential and incidental damages, including his lost profits measured by what he would have made if the contract had been allowed to run its course. These are called “anticipatory profits” and every government contracting student knows that these are damages the government never pays.
The Court of Claims (now the US Court of Federal Claims) reasoned that there were some clauses that were required to be in contracts that reflected such an ingrained principle of federal contracting law that their omission could not be tolerated. As a matter of public policy, therefore, if the clause was omitted, it could only have been by accident and it must be read into the contract. As a result Mr. Christian’s contract was deemed terminated for convenience and his damages were limited to the termination for convenience clause limitations, once they were “read into” his contract.
On the one hand this may seem very unfair to Mr. Christian. Looking at it from the view of the “public” however, the termination clause itself is so unique to government contracting simply because it does reflect a very important policy. If the government no longer needs whatever the contract is for, the taxpayer should not be required to continue paying for something it does not need. In commerce generally this is considered a breach, but for the government different policies apply. So the Christian Doctrine has been developed to provide the following guidance: IF (and only if) there exists a required clause that reflects an important public policy, its omission will be corrected by reading the clause into the contract. So there are two essential elements for invoking this doctrine. First the clause in question must be required by the regulation or statute. Second, it must reflect an important public policy. If it meets those standards, then the Christian Doctrine will apply and the clause will be considered part of the contract, whether or not it appears by reference or full text in the contract.
Clearly not all clauses fit into those requirements. One clause that does not is the “Availability of Funds” clause. Can you figure out why? We’ll talk about that clause next time.