The Construction Industry in the U.S. Supreme Court: Part 1, Contract Law

AuthorBy Carl J. Circo
Published in
The Construction Lawyer
, Volume 41, Number 2, Season 2021. © 2021 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
The Construction Industry in the U.S.
Supreme Court: Part 1, Contract Law
By Carl J. Circo
For roughly 100 years, the
U.S. Supreme Court regularly
resolved common law issues.
During this time, the Court
issued many opinions that
helped shape construction law,
especially through a series of
decisions establishing or rening
contract law principles in the
construction industry context.
Even after the Erie Doctrine pretermitted its common
law role,1 the Court’s decisions resolving federal con-
tract disputes continued to inuence construction law.
This continued until around the middle of the 20th cen-
tury, when the Court’s construction law jurisprudence
faded, virtually disappearing except when construction
industry cases raised issues under the U.S. Constitution
or under federal statutes, regulations, or procedural rules.
This declining inuence on construction law corresponds
to the Court’s need to “husband its scarce adjudicatory
resources for the most fundamental constitutional and
statutory questions.”2 When new and important ques-
tions arise in federal contract disputes today, they can
normally be resolved in the highly specialized federal
agency boards and the U.S. Court of Federal Claims (for-
merly the Claims Court), with the U.S. Court of Appeals
for the Federal Circuit functionally serving as the court
of last resort.3
This article, the rst of a two-part review of the Court’s
decisions on construction industry disputes, addresses the
opinions most directly involving construction contracts.
The second part, to be published separately, will cover
the Court’s other construction industry decisions, includ-
ing those resolving constitutional issues, and applying a
range of federal legislation.
The U.S. Supreme Court and the Formative Period
of Contract Law
Unlike property and tort law, the fundamental princi-
ples of contract law only began to solidify in the 18th
century.4 The body of law we know today as U.S. con-
tract law truly blossomed during the late 19th to early
20th centuries. At that time, U.S. contract law at least
nominally embodied what scholars often call the clas-
sical theory of Williston and of the rst Restatement of
Contracts. Its devotion to individual freedom of contract
and the sanctity of express promises promoted xed rules
governing exchange relationships. The classical concep-
tion offered certainty and predictability, and it tended
toward dogma. By early in the 20th century, the legal
realists came onto the scene and an alternative concep-
tion of contract emerged. It advocated relatively exible
principles over rigid rules, embracing such indetermi-
nate standards as reasonableness, good faith, and fair
dealing, and tolerating a signicant degree of judicial
discretion in resolving contract disputes. It allowed for a
more contextual framework that featured guiding prin-
ciples applying variably to distinct transaction types. In a
word, it was contextual. “Instead of just contracts, there
are contracts for the sale or lease of personal and real
property, construction, personal and professional services,
transportation, the creation of security interests, the orga-
nization of businesses, and the settlement of disputes.”5
These notions became the core of neoclassical contract,
best illustrated by Article 2 of the Uniform Commer-
cial Code, the Restatement (Second) of Contracts, and
Corbin’s scholarly vision.
The chronological and theoretical dividing lines, how-
ever, were not nearly so neat and simple. Even during the
so-called classical contract era, in the courts, if not in the
academy, contract law evolved in more eclectic patterns
that evidenced uneven admixtures of classical and neo-
classical concepts. Then, after the legal realists’ movement
had set the stage, multiple alternative schools of thought
followed. In recent decades, economic analysis, critical
legal theory, relational principles, and neoformalism all
garnered adherents, each gathering support at different
times and in varying degrees, albeit more in the academy
than in the courts.
To this day, the abiding tension in
the cases continues to pit classical formalism and textu-
alism against the more exible and contextual principles
of neoclassical contract.
By serendipity, the Supreme Court’s most active
engagement with construction industry disputes coin-
cided with the golden age of U.S. contract law. Many of
the cases involved only claims by or against the federal
government, but those opinions eventually inuenced
state court decisions on similar issues. In this way, the
Court indirectly participated in the evolution of U.S. con-
tract law. For construction lawyers, the most famous of
these precedents came in the Court’s 1918 decision in
United States v. Spearin, establishing the widely accepted
principle that a project owner impliedly warrants the suf-
ciency of detailed plans and specications it provides
Carl J. Circo

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