In the case of United States at the Relation of Kinney v. United States Fidelity and Guaranty Company, 1911, the Supreme Court was asked to determine whether a surety company could be held liable for damages caused by a contractor's failure to complete work on time. The court ruled that while sureties are generally not responsible for consequential damages resulting from breaches of contract, they can be held liable if it is clear that both parties intended such liability when entering into their agreement. In this particular case, however, there was no evidence suggesting that either party had anticipated delays or agreed upon penalties for late completion during negotiations. Therefore, the court concluded that U.S Fidelity & Guaranty Co., as a surety company providing performance bonds guaranteeing timely completion of construction projects under federal contracts with Kinney-Coastal Construction Co., should not bear financial responsibility for any losses incurred due to project delays.

The dissenting opinion in the case of United States at the Relation of Kinney v. United States Fidelity and Guaranty Company argued that the majority's decision to dismiss Kinney's claim was incorrect. The dissent believed that there were sufficient grounds for a lawsuit, as it was clear from evidence presented during trial proceedings that U.S. Fidelity had failed to fulfill its contractual obligations towards Kinney by refusing to pay him his due under an insurance policy he held with them. This refusal constituted a breach of contract, which should have been enough reason for allowing Kinney’s suit against U.S Fidelity to proceed further in court rather than dismissing it outrightly as done by the majority justices.