Propriety of Reforming Lump-Sum Timber Sale Contract

The Forest Service requested an opinion on the propriety of reforming a lump-sum timber sale contract to reflect the actual volume of merchantable timber involved. The Forest Service believed that it negligently misinterpreted a material fact when it substantially overstated the volume of merchantable timber on the sale. During the advertisement of the sale, a prospective buyer told the Forest Service that there was less merchantable timber present than advertised. There was no indication in the record that the eventual buyer was informed that the amount of timber had been questioned. The purchaser informed the Forest Service that the sale did not contain the amount of timber advertised and that it would not make further payments on its outstanding balance to the Government. Although estimates of merchantable timber are not regarded as material aspects of timber sale contracts, GAO held that this case represented an exception because of two factors: (1) the provision of the contract which stated the amount of merchantable timber present, and (2) the failure of the Forest Service to inform the purchaser of the question concerning the amount raised by the third party. Ambiguities in timber sales contracts are to be construed in favor of the purchaser if the purchaser's interpretation is reasonable. Accordingly, GAO held that the contract be reformed to show the actual amount of the merchantable timber and the corresponding lump-sum payment including a refund to the purchaser.