Legal Question in Business Law in Montana

Federal Contract Cancellation Issue/Question?

The USPS asked if I could produce a more high-tech product at a rate of $13.40 per 1000 unit. I agreed to buy a specific type of equipment which cost $700,000. The contract was for an initial 2-years and renewable every 2-years at the discretion of the USPS and myself. The USPS, on 12/31/02, cancelled the contract after 46-months. This left me with a useless machine -- which was designed specifically for the USPS needs.

My question(s) is do I have any recourse with the USPS now that I am an owner of a piece of equipment costing $700,000 that is now worthless? The USPS, in their decision, to cancel the contract will most likely put my small business of 15-employees in bankruptcy and the business will shut down. There was zero compensation on the USPS's part in purchasing this machinery or any discontinuance compensation for the machinery.

Do I have any recourse to receiving any compensation on the machinery? Does the USPS have any obligation to assist my business from closing down due to the purchase of the equipment.


Asked on 2/12/03, 9:01 pm

1 Answer from Attorneys
Charles Aspinwall Charles S. Aspinwall, J.D., LLC

Re: Federal Contract Cancellation Issue/Question?

The contract is enforceable according to its terms. To the extent the USPS breached the contract they may be held liable in the court of claims. You are entitled to nothing outside the initial contract, however, which would seem to be limited to 2 months' income. After that, you were promised nothing and can be compensated for nothing. Anything beyond 2 years, according to your post, was a gamble which, unfortunately, did not pay off.

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Answered on 2/13/03, 12:22 am


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