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B-127877, JUN. 1, 1956

B-127877 Jun 01, 1956
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TO HERCULES FASTENER COMPANY: REFERENCE IS MADE TO YOUR LETTER OF APRIL 20. THE ITEM WAS FURTHER LISTED AS "1" UNDER THE QUANTITY COLUMN FOLLOWED BY THE DESCRIPTION "LOT" UNDER THE UNIT OF MEASURE. YOUR BID OF $890 FOR THE LOT WAS ACCEPTED AND THE PURCHASE PRICE WAS PAID BY YOU. PROVIDED THAT THE ITEM IN QUESTION WAS OFFERED "AS IS" AND "WHERE IS" AND THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION. BIDDERS WERE WARNED. NO ADJUSTMENT FOR SUCH VARIATION WOULD BE MADE WHERE AN AWARD WAS MADE ON A "PRICE FOR THE LOT" BASIS. 000 SAFETY NUTS WERE RECEIVED AND THAT THE REMAINDER OF THE ITEMS DELIVERED COMPRISED 281. SINCE THE SALE INVOLVED WAS ON A LOT BASIS AND SINCE THE CONTRACT CONTAINED AN EXPRESS DISCLAIMER OF WARRANTY ON THE PART OF THE GOVERNMENT.

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B-127877, JUN. 1, 1956

TO HERCULES FASTENER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 20, 1956, IN EFFECT REQUESTING REVIEW OF OUR SETTLEMENT OF APRIL 18, 1956, WHICH DISALLOWED YOUR CLAIM FOR AN ADJUSTMENT OF $451.60 IN THE PURCHASE PRICE OF CERTAIN SAFETY NUTS LISTED AS LOT ITEM NO. 115, UNDER CONTRACT NO. DA/S/-AII-156, DATED JUNE 16, 1955, WITH THE DEPARTMENT OF THE ARMY.

IN RESPONSE TO THE PERTINENT INVITATION REQUESTING BIDS ON VARIOUS ITEMS OF SURPLUS PROPERTY TO BE SOLD ON JUNE 16, 1955, YOU OFFERED TO PURCHASE, AMONG OTHERS, ITEM (LOT) NO. 115 DESCRIBED AS ,NUT, SAFETY, NUMBER 10,32 H001-40-35581 ....444,000 EA. * * * UNUSED.' THE ITEM WAS FURTHER LISTED AS "1" UNDER THE QUANTITY COLUMN FOLLOWED BY THE DESCRIPTION "LOT" UNDER THE UNIT OF MEASURE. YOUR BID OF $890 FOR THE LOT WAS ACCEPTED AND THE PURCHASE PRICE WAS PAID BY YOU.

PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, MADE A PART OF THE CONTRACT, PROVIDED THAT THE ITEM IN QUESTION WAS OFFERED "AS IS" AND "WHERE IS" AND THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION, BUT THAT THE GOVERNMENT MADE NO GUARANTY,WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE QUANTITY, DESCRIPTION, ETC. ALSO, BIDDERS WERE WARNED, UNDER PARAGRAPH 8, THAT IN THE EVENT OF ANY VARIATION BETWEEN THE QUANTITY LISTED FOR ANY ITEM AND THE QUANTITY OF SUCH ITEM DELIVERED TO THE PURCHASERS, NO ADJUSTMENT FOR SUCH VARIATION WOULD BE MADE WHERE AN AWARD WAS MADE ON A "PRICE FOR THE LOT" BASIS.

YOU ALLEGED THAT UPON DELIVERY OF THE LOT ITEM ONLY 163,000 SAFETY NUTS WERE RECEIVED AND THAT THE REMAINDER OF THE ITEMS DELIVERED COMPRISED 281,000 COMMON STEEL NUTS. YOU SEEK ADJUSTMENT ON THE BASIS OF THE COMPUTATION SET FORTH IN YOUR LETTER OF SEPTEMBER 30, 1955. HOWEVER, SINCE THE SALE INVOLVED WAS ON A LOT BASIS AND SINCE THE CONTRACT CONTAINED AN EXPRESS DISCLAIMER OF WARRANTY ON THE PART OF THE GOVERNMENT, YOUR CLAIM FOR REFUND OF THE ADJUSTED AMOUNT WAS DISALLOWED.

YOU PROTEST ANY INTERPRETATION OF THE LAW TO THE EXTENT THAT THE GOVERNMENT IS NOT LIABLE BECAUSE THE MATERIAL WAS SPECIFIED FOR SALE ON AN "AS IS" BASIS. YOU STATE THAT ANY PERSON IN OR OUTSIDE OF THE FASTENER BUSINESS WOULD RECOGNIZE A SAFETY NUT AND THAT PURSUANT TO THE INVITATION WARNING YOU DID INSPECT THE ITEM AND FOUND THE CASES "ON TOP" OPENED SO THAT THE ITEMS COULD BE SEEN. THE ITEMS ACTUALLY INSPECTED WERE FOUND BY YOU TO BE AS ADVERTISED BUT THE REMAINING UNINSPECTED ITEMS UPON DELIVERY WERE FOUND TO BE OTHERWISE. YOU ADMIT EXPERIENCE IN THIS TYPE OF PURCHASING AND HAVING FOUND NUMEROUS DISCREPANCIES IN FORMER TRANSACTIONS. YOU EXPRESS THE BELIEF THAT ANYTHING MAY HAVE HAPPENED HERE BUT THE FACT REMAINS THAT WHILE YOU BID ON 444,000 NUTS AND THAT NUMBER WAS DELIVERED, SUCH ITEMS COMPRISED BOTH SAFETY NUTS AND COMMON NUTS.

AS POINTED OUT ABOVE, THE SAFETY NUTS WERE OFFERED FOR SALE "AS IS" AND "WHERE IS" WITHOUT GUARANTY OR WARRANTY AS TO QUANTITY OR DESCRIPTION AND THE SALE WAS DESIGNATED AS ONE FOR "LOT.' YOUR BID FOR THE ITEM WAS MADE AND ACCEPTED ON THESE TERMS. HENCE, IT CANNOT BE SAID THAT THE GOVERNMENT IN ANY WAY BREACHED THE TERMS OR CONDITIONS OF THE SALE OR THAT THERE WAS A MISREPRESENTATION OF THE SAFETY NUTS BY THE GOVERNMENT AS TO THE QUANTITY OR DESCRIPTION. THIS CONCLUSION IS IN ACCORDANCE WITH ESTABLISHED PRINCIPLES OF LAW APPLICABLE TO SIMILAR SITUATIONS. LYNCH V. CURFMAN, 65 MINN. 170, 68 N.W. 5, 7; AND WILLISTON ON SALES (2D ED.), SECTION 213. IT IS PROPER TO STATE THAT EVEN IF ONLY THE 163,000 SAFETY NUTS WERE RECEIVED BY YOU AND NO COMMON NUTS WERE INCLUDED IN THE DELIVERY THE LAW IS EQUALLY APPLICABLE IN THE SITUATION HERE. IN THE CASE OF LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, WHEREIN IT WAS UNSUCCESSFULLY CONTENDED THAT THE UNITED STATES WAS LIABLE IN DAMAGE FOR A SHORTAGE IN DELIVERY OF SPECIFIED LOTS OF SCRAP IRON AND STEEL WHICH HAD BEEN OFFERED FOR SALE IN A SCHEDULE SHOWING THE VARIOUS FORTS WHERE THE SCRAP IRON WAS ACCUMULATED AND THE APPROXIMATE WEIGHTS AT EACH LOCATION AND WHICH HAD BEEN PURCHASED "AS IS" FOR A STIPULATED LUMP-SUM PRICE, THE COURT STATED AT PAGE 92:

"* * * THE NAMING OF QUANTITIES CANNOT BE REGARDED AS IN THE NATURE OF A WARRANTY, BUT MERELY AS AN ESTIMATE OF THE PROBABLE AMOUNTS IN REFERENCE TO WHICH GOOD FAITH ONLY COULD BE REQUIRED OF THE PARTY MAKING IT.'

ACCORDINGLY, IN THE LIGHT OF THE FOREGOING, THE SETTLEMENT OF APRIL 18, 1956, IS SUSTAINED.

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