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United States v. Spearin - 248 U.S. 132, 39 S. Ct. 59 (1918)

Rule:

Where one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused or become entitled to additional compensation, because unforeseen difficulties are encountered. Thus one who undertakes to erect a structure upon a particular site, assumes ordinarily the risk of subsidence of the soil. But if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. This responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements of the work. The contractor should be relieved, if he was misled by erroneous statements in the specifications. 

Facts:

The government hired the contractor to build a dry dock, which ultimately required a change in the contract to allow for the relocation of a sewer, but the government did not tell him about a defect in a part of the sewer. When the sewer broke and flooded the dock excavation site, the contractor refused to continue the dock construction until the government assumed responsibility for the existing and future damage from the sewer. After the government took over the project and had it completed by another builder under revised plans, the contractor brought a suit to recover the amount that he spent on the project and to recover damages for the contract's annulment. 

Issue:

Did the government breach its implied warranty that resulted in the contractor’s discontinuance of its work?

Answer:

Yes

Conclusion:

The court affirmed the award by the court of claims in favor of the contractor and found that the government breached its implied warranty that the sewer would be adequate if the contractor complied with the government's specifications in relocating the sewer. When the government annulled the contract without justification, it became liable for all damages resulting from its breach. The government's breach of an implied warranty as to the adequacy of a sewer when it shall be relocated according to the government's plans and specifications by the contractor for the building of a dry dock, followed by the government's repudiation of all responsibility for the past and for making working conditions safe in the future, justifies the contractor in refusing to resume the work, and his refusal furnishes no justification to the government for annulling the contract. As for the damage award, the annulment entitled the contractor to compensation for the government's breach, and the award was proper.

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