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6 COMP. GEN. 692

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American Government

6 COMP. GEN. 692

Comptroller General of the United States
April 22, 1927

A-18199, APRIL 22, 1927, 6 COMP. GEN. 692

CONTRACTS - DISCOUNTS - LIQUIDATED DAMAGES - ORDER OF DEDUCTION UNDER A CONTRACT FOR THE PURCHASE OF TRUCKS BY THE GOVERNMENT, WHICH STIPULATED FOR A DEDUCTION OF CASH DISCOUNT FOR PAYMENT MADE WITHIN 10 DAYS AND FOR A DEDUCTION OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY FROM ANY PAYMENT DUE OR TO BECOME DUE THE CONTRACTOR, THE DISCOUNT IS TO BE FIRST DEDUCTED ON THE FULL CONTRACT PRICE AND THE LIQUIDATED DAMAGES WITHHELD FROM THE BALANCE DUE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, APRIL 22, 1927:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 9, 1927, INCLOSING COPY OF A CONTRACT DATED MARCH 18, 1927, WITH THE CENTURY MOTOR TRUCK CO. (INC.), FOR DELIVERY OF 12 TRUCKS ON OR BEFORE MARCH 26, 1927, 3 TRUCKS EACH AND EVERY DAY THEREAFTER UNTIL APRIL 8, 1928, AND 2 TRUCKS ON APRIL 8, 1927, OR A TOTAL OF 50 TRUCKS AT $2,157 EACH, LESS DISCOUNT OF 2 1/2 PERCENT CONDITIONED UPON PAYMENT BEING MADE WITHIN 10 DAYS AFTER DELIVERY OF EACH TRUCK. THE CONTRACT CONTAINS A STIPULATION, IN PARAGRAPH 2, FOR DEDUCTION OF LIQUIDATED DAMAGES AT THE RATE OF $50 A DAY FOR EACH AND EVERY DAY OF DELAY IN DELIVERY NOT "CAUSED BY THE ACT OF AN AGENT OF THE DEPARTMENT OF AGRICULTURE OR BY CIRCUMSTANCES BEYOND THE CONTROL OF THE CONTRACTOR.' YOU REPORT THAT THERE WERE DELAYS IN DELIVERY AND REQUEST DECISION WHETHER DISCOUNT SHOULD BE DEDUCTED BEFORE OR AFTER DEDUCTION OF LIQUIDATED DAMAGES.

THE STIPULATION WITH RESPECT TO DISCOUNT AND THE STIPULATION WITH RESPECT TO LIQUIDATED DAMAGES ARE MUTUALLY INDEPENDENT, THE FIRST BEING TO SECURE PROMPT PAYMENT OF ANY SUMS DUE THE CONTRACTOR FOR AUTOMOTIVE EQUIPMENT DELIVERED, AND THE SECOND BEING TO COMPENSATE THE UNITED STATES FOR ANY DELAYS IN DELIVERY OF SUCH EQUIPMENT. IT IS NECESSARY TO FIRST DEDUCT THE DISCOUNT WHEN PAYMENT IS MADE WITHIN THE REQUIRED PERIOD OF 10 DAYS IN ORDER TO DETERMINE THE AMOUNT DUE THE CONTRACTOR, AND THE CONTRACT EXPRESSLY PROVIDES THAT THE LIQUIDATED DAMAGES, IF ANY, SHALL BE DEDUCTED FROM "ANY PAYMENT DUE, OR TO BECOME DUE," UNDER THE CONTRACT.

ANSWERING YOUR QUESTION SPECIFICALLY, YOU ARE ADVISED THAT UNDER THE TERMS OF THE CONTRACT OF MARCH 18, 1927, THE DISCOUNT IS REQUIRED TO BE DEDUCTED FROM THE CONTRACT PRICE OF THE AUTOMOTIVE EQUIPMENT TO DETERMINE THE AMOUNT DUE THE CONTRACTOR AND LIQUIDATED DAMAGES ARE TO BE DEDUCTED FROM THE AMOUNT THUS DETERMINED TO BE DUE THE CONTRACTOR.



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