B-124929, OCT. 13, 1955

B-124929, OCT. 13, 1955

TO FORTNER BROS. MIDWEST CORP.:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 18, 1955, REQUESTING REVIEW OF SETTLEMENT DATED JULY 13, 1955, WHICH DISALLOWED YOUR CLAIM FOR $3,290, ALLEGED TO BE DUE AS A PARTIAL REFUND OF THE AMOUNT PAID FOR REFRIGERATORS PURCHASED FROM THE DEPARTMENT OF THE NAVY UNDER CONTRACT NO. N665S-20607, DATED DECEMBER 31, 1954.

THE INVITATION DESCRIBED THE REFRIGERATORS AS "UNUSED-FAIR" AND "UNUSED- GOOD.' YOU CONTEND THAT UPON RECEIPT OF THE REFRIGERATORS YOU FOUND THAT NOT ONE REFRIGERATOR WAS IN FACT "UNUSED," AND THAT SOME WERE ANCIENT AND OLD STYLE. YOU STATE THAT YOU WERE DENIED AN OPPORTUNITY TO INSPECT THE MERCHANDISE AND THAT THE GOVERNMENT ACTED IN BAD FAITH IN NOT OPENING THE CRATES AND IN STORING THEM SO TIGHTLY THAT INSPECTION WAS IMPOSSIBLE. ALSO, YOU CONTEND THAT THE GOVERNMENT ACTED IN BAD FAITH IN FAILING TO PUBLICIZE THAT PERMISSION TO UNCRATE THE REFRIGERATORS WOULD BE GRANTED.

IN THIS CONNECTION, ATTENTION IS INVITED TO THE STATEMENT OF FACTS BY THE CONTRACTING OFFICER, DATED APRIL 28, 1955, IN PART, AS FOLLOWS:

"* * * IT WAS ASCERTAINED THAT THE CRATES WERE OPENED IN SUCH A WAY THAT AN INSPECTION FOR TYPE OF MATERIAL ONLY COULD HAVE BEEN MADE BY BIDDERS.

"THE CLAIMANTS ASSERTION THAT HE WAS DENIED ADEQUATE OPPORTUNITY TO INSPECT IS ESSENTIALLY NOT TRUE. HAD HE REQUESTED PERMISSION TO UNCRATE THE REFRIGERATORS, AUTHORITY TO DO SO WOULD HAVE BEEN GRANTED IN ACCORDANCE WITH PARAGRAPH ONE OF THE GENERAL SALES TERMS AND CONDITIONS OF THE CONTRACT.'

OUR OFFICE, OF COURSE, HAVING NO FIRST-HAND KNOWLEDGE OF THE FACTS, MUST NECESSARILY RELY ON THE REPORT OF THE ADMINISTRATIVE OFFICE IN REGARD TO THE MATTER. IN THE ABSENCE OF EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF, IT IS IN THE INVARIABLE RULE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO ACCEPT THE STATEMENT OF FACTS AS REPORTED BY THE ADMINISTRATIVE OFFICER. SEE 3 COMP. GEN. 51; 15 ID. 253; 16 ID. 410; AND ID. 1105.

WHILE, AS YOU ALLEGED, THE INVITATION DID NOT SPECIFICALLY STATE THAT THE GOVERNMENT WOULD UNCRATE THE REFRIGERATORS FOR INSPECTION AT THE BIDDER'S REQUEST, IT DID ADVISE THE BIDDER THAT THE PROPERTY DESCRIBED MAY BE INSPECTED DURING CERTAIN HOURS. ALSO, PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS URGED THE BIDDERS TO INSPECT THE PROPERTY PRIOR TO SUBMITTING BIDS. IT ALSO PROVIDED THAT THE PROPERTY WOULD BE AVAILABLE FOR INSPECTION AND THAT IN NO CASE WOULD FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM.

WHILE IT MIGHT NOT HAVE BEEN PRACTICABLE FOR YOU TO HAVE MADE A COMPLETE PHYSICAL INSPECTION OF EACH REFRIGERATOR, NEVERTHELESS, IN VIEW OF THE EXPLICIT TERMS AND CONDITIONS UNDER WHICH THE PROPERTY WAS BEING OFFERED BY THE GOVERNMENT, IT WOULD HAVE BEEN TO YOUR DISTINCT ADVANTAGE EITHER TO HAVE INSISTED UPON YOUR UNEQUIVOCAL RIGHT TO HAVE INSPECTED EACH ITEM, OR, IF THAT WERE NOT PRACTICABLE, TO HAVE REFUSED TO SUBMIT A BID UNDER THE TERMS UPON WHICH THE INSTANT PROPERTY WAS ADVERTISED FOR SALE. THERE IS NOTHING IN THE RECORD TO ESTABLISH THAT THE DISPOSAL OFFICER ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE TRANSACTION.

THE GENERAL SALE TERMS AND CONDITIONS PROVIDED THAT THE MATERIAL WAS OFFERED "AS IS" AND "WHERE IS," WITHOUT RECOURSE AGAINST THE GOVERNMENT; AND THAT--- QUOTING FROM PARAGRAPH 2---

"* * * 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.'

IT IS DIFFICULT TO PERCEIVE HOW CLEARER OR MORE EXPLICIT LANGUAGE COULD HAVE BEEN USED TO APPRISE ALL PROSPECTIVE BIDDERS THAT THEY WERE CONTRACTING FOR THE PURCHASE OF THE LISTED MATERIALS AT THEIR OWN RISK. THE COURTS HAVE HELD REPEATEDLY THAT SUCH PROVISIONS CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY. LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676. THOSE CASES, AND NUMEROUS OTHER CASES, CONCLUDE THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT, ANY WARRANTIES WHATEVER. IN 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. FURTHERMORE, THERE IS NO SHOWING OF BAD FAITH IN DESCRIBING THE PROPERTY SINCE THE CONTRACTING OFFICER REPORTED THAT THE HOLDING ACTIVITY MAINTAINED THAT, ACCORDING TO THE BEST INFORMATION AVAILABLE, THE REFRIGERATORS WERE IN UNUSED CONDITION.