Uploaded February 2025 | Updated September 2026, 2 weeks ago
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DJ Manufacturing Corp. v. United States - United States Court of Appeals for the Federal Circuit
86 F.3d 1130 (1996)
A liquidated damages clause in a contract stipulates the amount of damages the promisee will recover if the promisor breaches the contract.
Such clauses are generally enforceable unless the amount of damages is so high that it punishes the promisor for its failure to perform rather than simply compensating the promisee for its injury.
In DJ Manufacturing Corporation versus United States, a plaintiff who fell down on the job tried to get out from under its promise to pay liquidated damages.
DJ Manufacturing contracted with the federal government to supply combat field packs to support troops participating in operation Desert Storm. The contract provided for liquidated damages to be assessed at one fifteenth of one percent of the contract price for each day that delivery was delayed. DJ missed multiple delivery deadlines.
Accordingly, the government withheld payment of about eight percent of the contract price.
DJ sued the government and the court of federal claims to recover the withheld amount, arguing that the liquidated damages clause was an unenforceable penalty.
The government moved for summary judgment. In support of its motion, the government submitted evidence that possession of the field packs was essential to the troops' combat readiness and that all contracts for materials for operation Desert Storm contained liquidated damages clauses for late delivery because it was critical to get war supplies to the soldiers quickly. In opposition, DJ's president testified that the clause appeared to be just a standard rate and not related to any specific need for the contract items. The district court granted the government's motion. DJ appealed to the federal circuit.
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Get more case briefs explained with Quimbee. Quimbee has over 42,700 case briefs (and counting) keyed to 988 casebooks ► quimbee.com/case-briefs-overview
DJ Manufacturing Corp. v. United States - United States Court of Appeals for the Federal Circuit
86 F.3d 1130 (1996)
A liquidated damages clause in a contract stipulates the amount of damages the promisee will recover if the promisor breaches the contract.
Such clauses are generally enforceable unless the amount of damages is so high that it punishes the promisor for its failure to perform rather than simply compensating the promisee for its injury.
In DJ Manufacturing Corporation versus United States, a plaintiff who fell down on the job tried to get out from under its promise to pay liquidated damages.
DJ Manufacturing contracted with the federal government to supply combat field packs to support troops participating in operation Desert Storm. The contract provided for liquidated damages to be assessed at one fifteenth of one percent of the contract price for each day that delivery was delayed. DJ missed multiple delivery deadlines.
Accordingly, the government withheld payment of about eight percent of the contract price.
DJ sued the government and the court of federal claims to recover the withheld amount, arguing that the liquidated damages clause was an unenforceable penalty.
The government moved for summary judgment. In support of its motion, the government submitted evidence that possession of the field packs was essential to the troops' combat readiness and that all contracts for materials for operation Desert Storm contained liquidated damages clauses for late delivery because it was critical to get war supplies to the soldiers quickly. In opposition, DJ's president testified that the clause appeared to be just a standard rate and not related to any specific need for the contract items. The district court granted the government's motion. DJ appealed to the federal circuit.
Want more details on this case? Get the rule of law, issues, holding and reasonings, and more case facts here: quimbee.com/cases/dj-manufacturing-corp-v-united-states
The Quimbee App features over 42,700 case briefs keyed to 988 casebooks. Try it free for 7 days! ► quimbee.com/case-briefs-overview
Have Questions about this Case? Submit your questions and get answers from a real attorney here: quimbee.com/cases/dj-manufacturing-corp-v-united-states
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