B-154199, JUN. 8, 1964

B-154199, JUN. 8, 1964

TO AMERICAN NICKEL ALLOY MANUFACTURING CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS DATED MAY 6 AND 18, 1964, REGARDING YOUR PURCHASE OF CERTAIN SCRAP METAL FROM THE GOVERNMENT UNDER SALES INVITATION NO. 11-S-64-22, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA NAVAL BASE, PHILADELPHIA, PENNSYLVANIA.

ON AUGUST 13, 1963, YOU WERE AWARDED CONTRACT NO. DSA-11-S-2606 FOR ITEM NO. 55, DESCRIBED IN THE INVITATION AS 1500 POUNDS OF SCRAP INCONEL, AT YOUR HIGH BID PRICE OF $0.50261 PER POUND. ON SEPTEMBER 6, 1963, YOU HAD THE MATERIAL, WHICH WEIGHED 2,434 POUNDS, REMOVED FROM THE DISPOSAL ACTIVITY BY MOTOR CARRIER.

ON SEPTEMBER 17, 1963, THE SALES OFFICE ISSUED AN INVOICE TO YOU REQUESTING PAYMENT OF $469.43, THE VALUE OF THE OVERAGE OF 934 POUNDS AT $0.50261 PER POUND. BY LETTER OF SEPTEMBER 23, 1963, YOU DECLINED TO PAY THE INVOICE. YOU ADVISED THE SALES OFFICE THAT THE MATERIAL CONTAINED ONLY 1,257 POUNDS OF INCONEL. THEREFORE, YOU OFFERED TO ACCEPT 1,650 POUNDS OF THE MATERIAL (1,500 POUNDS PLUS A TEN PERCENT INCREASE IN ACCORDANCE WITH THE INVITATION QUANTITY VARIATION CLAUSE) WITH THE PURCHASE PRICE COMPUTED AS FOLLOWS:

TABLE

1,257 POUNDS INCONEL AT $0.50261 PE- POUND $631.78

396 POUNDS STAINLESS STEEL SOLIDS AT $0.05 PER POUND 19.80

TOTAL $651.58

IN ADDITION, YOU REQUESTED A REFUND FROM THE GOVERNMENT OF $102.34, REPRESENTING THE DIFFERENCE BETWEEN THE PURCHASE PRICE OF $753.92 PAID FOR 1,500 POUNDS OF INCONEL AT THE CONTRACT RATE AND THE PRICE OF $651.58 COMPUTED AS ABOVE. YOU ALSO REQUESTED THAT THE GOVERNMENT ARRANGE DISPOSITION OF 781 POUNDS OF REJECTED SCRAP.

RETURN OF THE ENTIRE SHIPMENT TO THE GOVERNMENT IS NOT POSSIBLE BECAUSE YOU DISPOSED OF THE INCONEL AFTER SEGREGATING THE MATERIAL.

WHILE YOU CONTEND THAT YOU SHOULD NOT BE REQUIRED TO PAY THE CONTRACT RATE FOR THE MATERIAL THAT IS NOT INCONEL, YOU STATE THAT YOU ARE WILLING TO ACCEPT APPLICATION OF THE DOCTRINE OF ,CAVEAT EMPTOR" AS TO 1,650 POUNDS OF THE MATERIAL (1,500 POUNDS PLUS THE 10 PERCENT VARIATION). THEREFORE, YOU HAVE RELINQUISHED YOUR CLAIM, WHICH WAS DISALLOWED BY OUR SETTLEMENT DATED APRIL 2, 1964, AND YOU NOW REQUEST ONLY THAT THE GOVERNMENT CANCEL ITS CLAIM FOR THE ADDITIONAL $469.43.

AS INVESTIGATION BY THE SALES OFFICE DISCLOSES THAT A LABORATORY TEST OF A SAMPLE OF THE ORIGINAL PROPERTY OFFERED FOR SALE INDICATED IT WAS INCONEL AND NO MATERIAL WAS ADDED TO THE PROPERTY AFTER IT WAS REPORTED FOR SALE. FURTHERMORE, WHILE A SUBSEQUENT CHEMICAL ANALYSIS HAS INDICATED THAT THE HEAVY AND BULKY PIECES OF METAL ATTACHED TO THE ITEMS OFFERED FOR SALE AND ORIGINALLY CONSIDERED AS INCONEL ARE NOT INCONEL, SUCH INFORMATION WAS NOT AVAILABLE AT THE TIME OF COMPLETION OF THE SALE.

PARAGRAPHS 2 AND 8 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION PROVIDED AS FOLLOWS:

"2. CONDITION AND LOCATION OF PROPERTY. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, ALL PROPERTY LISTED THEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS.' IF IT IS PROVIDED THEREIN THAT THE GOVERNMENT SHALL LOAD, THEN "WHERE IS" MEANS F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION. THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION. HOWEVER, THE GOVERNMENT MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OF PURPOSE. EXCEPT AS PROVIDED IN CONDITIONS NO. 8 AND 10, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. THIS IS NOT A SALE BY SAMPLE.

"8. ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT. WHEN PROPERTY IS SOLD ON A "UNIT PRICE" BASIS, THE GOVERNMENT RESERVES THE RIGHT TO VARY THE QUANTITY OR WEIGHT DELIVERED BY 10 PERCENT FROM THE QUANTITY OR WEIGHT LISTED IN THE INVITATION; AND THE PURCHASER AGREES TO ACCEPT DELIVERY OF ANY QUANTITY OR WEIGHT WITHIN THESE LIMITS. THE PURCHASE PRICE WILL BE ADJUSTED UPWARDS OR DOWNWARDS IN ACCORDANCE WITH THE UNIT PRICE AND ON THE BASIS OF THE QUANTITY OR WEIGHT ACTUALLY DELIVERED. NO ADJUSTMENT FOR VARIATION WILL BE MADE WHERE PROPERTY IS SOLD ON A "PRICE FOR THE LOT" BASIS.'

UNDER PROVISIONS SUCH AS PARAGRAPH 2, IN THE ABSENCE OF BAD FAITH OR FRAUD ON THE PART OF THE SELLER, BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER, THE PURPOSE AND EFFECT OF SUCH PROVISIONS BEING TO IMPOSE ALL RISKS OF MISTAKE UPON THE BUYER. UNITED STATES V. HATHAWAY, 242 F.2D 897; AMERICAN SANITARY RAG CO. V. UNITED STATES, 142 CT.CL. 293. ACCORDINGLY, THE GOVERNMENT HAVING ACTED IN GOOD FAITH IN PREPARING THE SALES DESCRIPTION, THERE IS NO LEGAL BASIS TO GRANT YOU RELIEF BECAUSE OF THE VARIATION BETWEEN THE DESCRIPTION IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. THEREFORE, THE SETTLEMENT DISALLOWING YOUR CLAIM FOR PARTIAL REFUND OF THE PURCHASE PRICE WAS PROPER.

AS TO THE GOVERNMENT'S CLAIM FOR PAYMENT OF THE CONTRACT RATE FOR THE 934 POUNDS OF MATERIAL IN EXCESS OF THE 1,500 POUNDS FOR WHICH YOU HAVE ALREADY MADE PAYMENT, WE FIND NO BASIS FOR ITS WITHDRAWAL.

BY THE TERMS OF YOUR CONTRACT, YOU WERE REQUIRED TO ACCEPT 1,500 POUNDS OF THE MATERIAL OFFERED FOR SALE PLUS A TEN PERCENT OVERAGE OF 150 POUNDS. SINCE THE SHIPMENT WEIGHED 2,434 POUNDS, YOU COULD HAVE REFUSED TO ACCEPT THE EXCESS 784 POUNDS. HOWEVER, YOU RETAINED THE FULL SHIPMENT, SEGREGATED THE MATERIAL, AND DISPOSED OF THE PORTION WHICH PROVED TO BE INCONEL. BY SUCH ACTIONS YOU ASSUMED COMPLETE JURISDICTION OVER THE ENTIRE SHIPMENT. CLEARLY, IF THE GOVERNMENT WERE OBLIGATED TO REPOSSESS THE MATERIAL CONSTITUTING THE 784 POUND OVERAGE, IT WOULD BE ENTITLED TO REPOSSESS A MIXTURE OF THE SCRAP AS DELIVERED, INCLUDING INCONEL AND STAINLESS STEEL. SINCE REMOVAL OF THE INCONEL HAS CHANGED THE NATURE OF THE PROPERTY AND THE REMAINDER CAN NO LONGER BE REGARDED AS THE MATERIAL OFFERED FOR SALE, THE GOVERNMENT HAS BEEN RELIEVED OF ANY OBLIGATION TO REMOVE ANY PORTION OF THE EXCESS MATERIAL, AND YOU, IN TURN, ARE LIABLE FOR PAYMENT FOR SUCH MATERIAL AT THE RATE SPECIFIED IN YOUR CONTRACT.