Builders and Contractors Exchange
Weekly Bulletin: 08 May 2006
Buy A Truck and Go To Jail
By: Michael Sterling
In a recent case the U.S. Court of Federal Claims held that the federal government may breach the implied covenant of good faith and fair dealing implied in every contract even though the government had no specific intent to injure.
The decision arose out of an amusing but unfortunate situation. A Hispanic American purchased a truck from the federal government at public auction “as is where is.” He then drove the truck to Mexico. At the border he was arrested for possession of drugs and spent a year in jail.
Where did the drugs come from? You guessed it. There were 22 packages of marijuana in the body of the truck. Apparently, the truck had been seized in a drug bust but not well searched by the government before it was sold at auction. After the buyer was released from jail he sued the government for breach of the implied covenant of good faith and fair dealing when it sold him a truck full of drugs.
The government argued that it could not be liable for breach of the covenant unless it acted with the specific intent to injure the buyer. The court did not “buy” that argument.
What does this decision mean to you? First, if the federal government does not treat you “fairly” there are times when you can find a remedy even if there is not an express contract provision to address the issue. Second, you do not have to show that the government intended to cause harm in such circumstances. Finally, beware when you buy anything “as is where is.” You never know what you might get.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.