B-131951, JUN. 11, 1957

B-131951, JUN. 11, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED MAY 22, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE HAYNES EQUIPMENT COMPANY, INC., ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. O.I. 2970 WAS AWARDED.

THE ATLANTA GENERAL DEPOT, UNITED STATES ARMY, ATLANTA, GEORGIA, BY SPOT BID SALE INVITATION NO. 57-4, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, THREE PAVING BREAKERS, ITEM 3. THE CONDITION OF THE BREAKERS COVERED BY ITEM 3 WAS DESCRIBED IN THE INVITATION AS BEING "UNUSED.' IN RESPONSE THE HAYNES EQUIPMENT COMPANY, INC., SUBMITTED A BID DATED SEPTEMBER 26, 1956, OFFERING TO PURCHASE THE PAVING BREAKERS COVERED BY ITEM 3 AT A PRICE OF $168 EACH. THE 33 OTHER BIDS ON ITEM 3 RANGED FROM $111 EACH TO $10.05 EACH, AND IT IS REPORTED THAT A BID OF $106 EACH WAS SUBMITTED BY A BIDDER WHO ACTUALLY INSPECTED THE EQUIPMENT. THE BID OF THE HAYNES EQUIPMENT COMPANY, INC., WAS ACCEPTED AS TO ITEM 3 ON OCTOBER 5, 1956, AND SHORTLY THEREAFTER, THE CORPORATION REMITTED THE PURCHASE PRICE OF THE EQUIPMENT COVERED BY THAT ITEM.

UPON DELIVERY OF THE PAVING BREAKERS, THE HAYNES EQUIPMENT COMPANY, INC., BY LETTER DATED OCTOBER 29, 1956, ADVISED THE DEPOT THAT THE THREE PAVING BREAKERS WERE MISREPRESENTED IN THE SALES INVITATION, SINCE THE BREAKERS WERE DESCRIBED AS "UNUSED," WHEREAS THE BREAKERS IT RECEIVED ACTUALLY HAD ONLY SCRAP VALUE AND THAT MAJOR PARTS WERE MISSING FROM TWO BREAKERS AND THAT THE THIRD BREAKER HAD A CRACKED FRONTHEAD. THE CORPORATION REQUESTED REFUND OF THE PURCHASE PRICE OF THE BREAKERS. BY LETTER DATED NOVEMBER 16, 1956, THE PROPERTY DISPOSAL OFFICER ADVISED THE HAYNES EQUIPMENT COMPANY, INC., THAT, IN VIEW OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT, PARTICULARLY PARAGRAPHS 1 AND 2, WHICH INCLUDE THE STANDARD DISCLAIMER OF WARRANTY CLAUSE, THE BEST AVAILABLE DESCRIPTION CLAUSE, AND THE CAUTION TO INSPECT CLAUSE, NO BASIS EXISTED FOR FAVORABLE CONSIDERATION OF ITS CLAIM FOR REFUND OF THE PURCHASE PRICE OF THE BREAKERS. AFTER A FURTHER EXCHANGE OF CORRESPONDENCE BETWEEN THE CORPORATION AND THE CONTRACTING AGENCY, THE CORPORATION SUBMITTED THREE PHOTOGRAPHS OF THE PAVING BREAKERS IT RECEIVED AND FOUR AFFIDAVITS FROM ALLEGED DISINTERESTED PARTIES, ATTESTING AS TO THE CONDITION OF THE BREAKERS.

IN HIS STATEMENT DATED JANUARY 14, 1957, THE ASSISTANT PROPERTY DISPOSAL OFFICER, WHO PREPARED THE INVITATION TO BID, STATED THAT THE PAVING BREAKERS IN QUESTION APPEARED TO BE UNUSED AS THEY WERE TAPED AND ONLY A VISUAL INSPECTION WAS MADE.

THE GENERAL SALE TERMS AND CONDITIONS MADE A PART OF THE AGREEMENT PROVIDED THAT THE MATERIALS LISTED WERE OFFERED WITH THE FOLLOWING RESERVATIONS--- QUOTING FROM PARAGRAPH 2---

"ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION, BUT THE GOVERNMENT MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE, AND NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED; THIS IS NOT A SALE BY SAMPLE.'

THE COURTS MANY TIMES HAVE CONSIDERED SUCH CONTRACT STIPULATIONS IN CASES INVOLVING THE SALE OF GOVERNMENT-OWNED SURPLUS GOODS, AND HAVE HELD CONSISTENTLY THAT SUCH PROVISIONS CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY, PRECLUDING ANY CLAIM FOR NONCONFORMITY OF THE GOODS WITH THE DESCRIPTIONS. SEE W. E. HEDGER CO. V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; SILBERSTEIN AND SON V. UNITED STATES, 69 C.CLS. 412. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH PROVISIONS BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT, ANY WARRANTIES WHATEVER. DISPOSING OF SURPLUS MATERIALS THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS IGNORANT OF THE CONDITION OF THE GOODS IT SELLS. THAT FACT IS MADE KNOWN TO ALL BIDDERS BY THE "AS IS" TERMS OF THE CONTRACT WHEREBY THE PARTIES AGREE THAT THE RISK AS TO THE CONDITION OF THE MATERIAL SOLD IS ASSUMED BY THE PURCHASER AS ONE OF THE ELEMENTS OF THE BARGAIN. IN THE CASE OF OVERSEAS NAVIGATION CORPORATION V. UNITED STATES, 131 C.CLS. 70, THE COURT OF CLAIMS HELD THAT THE TERMS OF THE SALES CONTRACT THERE UNDER CONSIDERATION, INCLUDING ITS "AS IS, WHERE IS" PROVISIONS, SPOKE FOR THEMSELVES AND THE PLAINTIFF WAS LEGALLY BOUND BY THEM.

WHILE THE GOVERNMENT'S DESCRIPTION OF THE PROPERTY HERE INVOLVED MAY HAVE BEEN INACCURATE, THERE IS NO INDICATION THAT IT WAS NOT PREPARED IN GOOD FAITH OR THAT THERE WAS BETTER INFORMATION AVAILABLE TO THE GOVERNMENT, AND THERE WAS AN EXPRESS DISCLAIMER OF ANY WARRANTY THAT THE PROPERTY WAS AS DESCRIBED. THE TERMS AND CONDITIONS WERE A MATERIAL PART OF THE OFFER OF SALE AND SINCE THE CORPORATION'S OFFER TO PURCHASE THE CONTRACT MATERIAL WAS MADE, AS EXPRESSLY STATED ON THE FACE OF THE BID, SUBJECT TO ALL THE GENERAL AND SPECIAL SALE TERMS AND CONDITIONS SET FORTH IN THE INVITATION, THEY ARE BINDING UPON IT, AND NO RELIEF MAY BE GRANTED FOR THE VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. SEE LAMBRAZO V. WOODRUFF, 175 N.E. 525, 75 A.L.R. 1017, AND HOOVER V. UTAH NURSERY COMPANY, 7 P.2D. 270.

MOREOVER, THE RECORD INDICATES THAT THE CORPORATION DID NOT INSPECT THE BREAKERS PRIOR TO THE SUBMISSION OF ITS BID. THE LAW IS CLEAR THAT WHERE SURPLUS MATERIALS ARE OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" BASIS, WITHOUT WARRANTY OR GUARANTY OF ANY KIND, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY, OR THAT THEY WERE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING. THE UNITED STATES COURT OF CLAIMS AND THE SUPREME COURT OF THE UNITED STATES HAVE RENDERED NUMEROUS DECISIONS IN WHICH THESE PRINCIPLES ARE ASSERTED. SEE M. SAMUEL AND SONS V. UNITED STATES, 61 C.CLS. 373; S. BRODY V. UNITED STATES, 64 C.CLS. 538; SACHS MERCANTILE CO. V. UNITED STATES, 78 C.CLS. 801; MOTTRAM V. UNITED STATES, 271 U.S. 15; MAQUIRE AND CO. V. UNITED STATES, 273 U.S. 67. SEE, ALSO, 29 COMP. GEN. 310; AND 32 ID. 181.

ACCORDINGLY, ON THE BASIS OF THE FACTS AND EVIDENCE PRESENTLY OF RECORD, THERE APPEARS TO BE NO LEGAL BASIS FOR AUTHORIZING A REFUND OF THE PURCHASE PRICE, AS REQUESTED BY THE CORPORATION, OR FOR AUTHORIZING ANY ADJUSTMENT WHATSOEVER IN THE PRICE FIXED IN THE CONTRACT FOR THE MATERIAL INVOLVED.