Friday, September 28, 2018

Guard Your Rubber Stamps

Penna Group, a roofing contractor for the Federal Bureau of Prisons, submitted a $146 thousand claim for costs performed under an expanded scope of work. The contracting officer denied the claim because Penna had signed a release of claims which released the United States from any and all claims arising under the contract. Moreover, on the "release" form, Penna had written "NONE" in the space to identify excepted claims and dollar amounts.

Penna argued that the "release" was of no force or effect because it was completed by one without the actual or apparent authority to do so, and also, the release can be invalidated because of economic duress and because of mutual mistake.

The CBCA (Civilian Board of Contract Appeals) concluded that the release was enforceable and it precluded the contractor from pursuing and prevailing upon the claim. The release bore the signature of the Penna's president. The president was aware that the individual who completed the release on behalf of the contract had his signature stamp; he thus had endowed her with actual and/or apparent authority to use the signature. The CBCA denied the claim. In its decision, the Board wrote:
A signature is binding if placed on a document by one with actual or apparent authority to do so. Negligent oversight regarding a signature stamp or electronic signature may result in the binding nature of the signature when appropriately relied upon by a party.
The Board went on to state that a company acts through its employees and agents. The president was aware that the employee had the signature stamp; this endowed her with the apparent, if not actual, authority to use it. The contractor proffered no support for a perceived limitation on the use of the stamp. Finally, the Board concluded that the Bureau of Prisons is not at fault for the president's failure to receive, review, or act on information included in its "release".

Read the complete decision here.

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