- 16 -
replacement parts, and the Government's loss of use of funds
improperly paid to Stencel--exceeded the $2.5 million that
petitioner paid under the settlement agreement. Petitioner
further contends that its representatives and attorneys always
intended for the entire settlement to represent compensation to
the Government for its losses.
Respondent counters that, regardless of the amount of the
Government's actual losses, the Government intended that the
disputed portion of the settlement payment would serve as a
penalty to deter Stencel and other Government contractors from
submitting false claims.
The parties present opposing positions respecting the
correct characterization of the disputed portion of the
settlement payment. Justice Oliver Wendell Holmes stated that
"the making of a contract depends not on the agreement of two
minds in one intention, but on the agreement of two sets of
external signs,--not on the parties' having meant the same thing,
but on their having said the same thing." Holmes, "The Path of
the Law", 10 Harv. L. Rev. 457, 464 (1897).
We reject petitioner's contention that the disputed portion
of the settlement agreement cannot be considered a penalty
because the Government's actual losses purportedly exceeded the
entire $2.5 million settlement payment. Neither party made a
serious effort to quantify the Government's actual losses in
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011