## Facts

- Hercules Incorporated and Wm. T. Thompson Company manufactured the herbicide “Agent Orange” for the United States during the Vietnam War era under fixed-price contracts.
- The contracts were issued under the Defense Production Act of 1950 and were heavily directed by the Government, which prescribed the formula, detailed manufacturing specifications, and labeling requirements.
- In the late 1970s and 1980s, Vietnam veterans and their families sued Agent Orange manufacturers, alleging injuries from exposure to dioxin associated with Agent Orange.
- The manufacturers, including Hercules and Thompson, incurred substantial costs defending the consolidated litigation and funding a class action settlement.
- After settling, Hercules and Thompson sued the United States in the Court of Federal Claims under the Tucker Act seeking reimbursement of their defense and settlement costs.
- They advanced two theories: (1) contractual indemnification implied from the contracting circumstances, and (2) an implied “warranty of specifications” based on the Government’s detailed specifications.

## Issues

1. Whether the contractors could recover postperformance third-party tort defense and settlement costs from the United States under an implied warranty-of-specifications theory tied to Government-furnished specifications.
2. Whether the contractors could recover those costs under an implied-in-fact contractual indemnification agreement inferred from the contracting circumstances, including Defense Production Act compulsion and Government control.
3. Whether the Tucker Act permits recovery on these theories absent an express contractual warranty or indemnity clause.

## Decision

- The Supreme Court affirmed judgment for the United States.
- The Court held the contractors could not recover on either the implied warranty-of-specifications claim or the implied-in-fact indemnification claim.
- The Court ruled that the Tucker Act reaches only express contracts and contracts implied in fact, not obligations implied in law, and the record did not establish an implied-in-fact promise by the Government to indemnify.
- The Court held that the implied warranty recognized for Government-furnished specifications does not extend beyond assuring satisfactory contract performance to cover postperformance third-party tort liabilities.

## Legal Principles

- Tucker Act jurisdiction over claims “founded upon any express or implied contract” is limited to express contracts and contracts implied in fact; it does not authorize recovery based on contracts implied in law.
- An implied-in-fact agreement requires objective manifestation of mutual intent (a “meeting of the minds”); Government direction, leverage, or superior knowledge alone does not establish an implied promise to indemnify for third-party claims.
- The implied warranty of specifications (associated with Government-furnished design or manufacturing specifications) supports an inference that following the specifications permits satisfactory performance; it does not, without more, shift postperformance third-party tort defense and settlement costs to the Government.
- Courts will not infer broad, open-ended Government indemnification obligations from procurement relationships absent clear contractual or statutory authorization.

## Conclusion

The Court held that manufacturers of Agent Orange could not use the Tucker Act to shift veterans’ tort-defense and settlement costs to the United States because neither the Government’s detailed specifications nor the Defense Production Act contracting context created an implied-in-fact indemnity, and the implied warranty of specifications does not cover postperformance third-party liabilities.


Hercules Inc. v. United States, 516 U.S. 417 (1996)