RONALD A. TORNCELLO AND SOLEDAD ENTERPRISES, INC. v. THE UNITED STATES, 231 Ct. Cl. 20

Summary

Defendant United States Navy executed a contract with the corporation for the maintenance of certain housing projects. Plaintiff claimed that defendant breached the requirements contract by using another party to remove pests from its grounds. The court rejected defendant's contention that it was not liable since it could have terminated the contract before giving the job to a third party that charged less based on a "termination for the convenience of the government" clause in the contract. The court held that if defendant was allowed to terminate the contract for a reason in existence at the time the contract was made, the contract was illusory. The court overruled an earlier case allowing the government to terminate a contract based on its finding a better price. Accordingly, the court reversed the decision of the Armed Services Board of Contract Appeals and remanded the case to the trial division to determine damages.