High “Litigation Impact”​ Term Number 6 – Equitable Relief

Sometimes a party is harmed – or being harmed – but unable to identify its monetary damages. In such cases, injunctive relief is how that party seeks redress. Injunctive relief clauses cover situations like non-compliance with a non-disclosure agreement or non-compete agreement. Certainly, subcontracts should have standard equitable relief clauses, but I also urge the parties, particularly the prime contractor, to include its communication with the government clause as part of the contract subject to injunctive relief.

When a subcontractor is in breach of a no-contact with government personnel provision, the prime contractor will likely not be able to easily identify its financial damages as a result of this conduct, at least at the outset. Allowing the activity to continue and suing the subcontractor for breach is not as preferable as stopping the prohibited conduct and doing so as quickly as possible. If the no-contact clause is not enumerated specifically in the equitable remedies clause, obtaining an injunction to stop the subcontractor’s communication is not foreclosed, and including it is not proof of the elements of injunctive relief. However, identifying a specific type of conduct subject to equitable relief demonstrates the parties’ understanding that the harm resulting from that behavior is unique and would be difficult to quantify monetarily.

The Take-Away – In some cases, stopping conduct is more important than recovering damages as a consequence of it. The result that could come from a subcontractor communicating inappropriate or misinformation to the government may cause financial harm that is difficult to quantify, such as loss of goodwill. Accordingly, and in an effort to help obtain a preliminary injunction should one be needed, prime contractors (and subs with lower-tiers) will to specifically indicate that the no-contact clause is subject to equitable relief.

FAROur government contracts posts are published by Attorney Kristi Morgan Aronica. She serves as litigation counsel to prime contractors and subcontractors in the government contracts market throughout Texas and nationally.