A-14288, JUNE 18, 1926, 5 COMP. GEN. 993

A-14288: Jun 18, 1926

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CONTRACTS - DELIVERY AND ACCEPTANCE OF INFERIOR GOODS WHERE A QUANTITY OF GASOLINE DELIVERED TO THE GOVERNMENT UNDER A PROPOSAL AND ACCEPTANCE AGREEMENT WAS FOUND TO BE INFERIOR IN GRADE TO CERTAIN SPECIFICATIONS MADE A PART OF THE AGREEMENT. A PORTION THEREOF PRIOR TO RECEIPT OF THE NOTICE FROM THE BUREAU OF STANDARDS THAT THE GASOLINE WAS OF AN INFERIOR QUALITY. THE VENDOR IS NOT ENTITLED TO BE PAID AS FOR PERFORMANCE OF THE CONTRACT. 1926: THERE IS FOR CONSIDERATION AND SETTLEMENT CLAIM OF THE CONTINENTAL OIL CO. THE INVITATION FOR PROPOSALS CONTAINED THE FOLLOWING STIPULATION RELATIVE TO THE EFFECT OF NONCOMPLIANCE WITH THE DESIGNATED SPECIFICATION: IF UPON ANALYSIS IT IS FOUND THAT THE GASOLINE FURNISHED DOES NOT CONFORM TO STANDARD SPECIFICATIONS.

A-14288, JUNE 18, 1926, 5 COMP. GEN. 993

CONTRACTS - DELIVERY AND ACCEPTANCE OF INFERIOR GOODS WHERE A QUANTITY OF GASOLINE DELIVERED TO THE GOVERNMENT UNDER A PROPOSAL AND ACCEPTANCE AGREEMENT WAS FOUND TO BE INFERIOR IN GRADE TO CERTAIN SPECIFICATIONS MADE A PART OF THE AGREEMENT, AND THE GOVERNMENT UPON RECEIPT OF THE GASOLINE USED, PURSUANT TO ITS NEEDS, A PORTION THEREOF PRIOR TO RECEIPT OF THE NOTICE FROM THE BUREAU OF STANDARDS THAT THE GASOLINE WAS OF AN INFERIOR QUALITY, THE VENDOR IS NOT ENTITLED TO BE PAID AS FOR PERFORMANCE OF THE CONTRACT, BUT MAY BE REIMBURSED ON A QUANTUM VALEBAT BASIS NOT IN EXCESS OF THE CONTRACT PRICE FOR THE GASOLINE DELIVERED AND ACCEPTED.

DECISION BY COMPTROLLER GENERAL MCCARL, JUNE 18, 1926:

THERE IS FOR CONSIDERATION AND SETTLEMENT CLAIM OF THE CONTINENTAL OIL CO., OF ALBUQUERQUE, N.MEX., FOR $1,261.11 AS THE PRICE OF 8,189 GALLONS OF GASOLINE FURNISHED UNITED STATES VETERANS' BUREAU HOSPITAL NO. 55 AT FORT BAYARD, N.MEX., FEBRUARY 9, 1926. ON JANUARY 25, 1926, THE BUSINESS EXECUTIVE OF THE UNITED STATES VETERANS' BUREAU, FORT BAYARD, N.MEX., INVITED PROPOSALS FOR FURNISHING AND DELIVERING ONE 10,000-GALLON TANK CAR OF "GASOLINE, MOTOR, UNITED STATES GOVERNMENT SPECIFICATION NO. 2-C.' THE INVITATION FOR PROPOSALS CONTAINED THE FOLLOWING STIPULATION RELATIVE TO THE EFFECT OF NONCOMPLIANCE WITH THE DESIGNATED SPECIFICATION:

IF UPON ANALYSIS IT IS FOUND THAT THE GASOLINE FURNISHED DOES NOT CONFORM TO STANDARD SPECIFICATIONS, THE CONTRACTOR WILL REMOVE WITHOUT COST TO THE GOVERNMENT WITHIN A REASONABLE TIME (TO BE DETERMINED BY THE MEDICAL OFFICER IN CHARGE) AFTER NOTIFICATION. IF THE GASOLINE IS REJECTED BY THE GOVERNMENT, SHOULD THE CONTRACTOR NOT REMOVE SAME WITHIN A REASONABLE TIME THE GOVERNMENT SHALL THEN BE AT LIBERTY TO HAVE THE GASOLINE REMOVED FROM THE PREMISES AND DISPOSE OF IT BY SALE AS THE GOVERNMENT SHALL ELECT. THE PROCEEDS FROM SUCH SALE, LESS THE COST INCIDENTAL TO ITS REMOVAL AND SALE, SHALL BE PAID OVER TO THE CONTRACTOR.

UNDER DATE OF JANUARY 30, 1926, THE CONTINENTAL OIL CO. SUBMITTED ITS PROPOSAL TO FURNISH THE GASOLINE AT A UNIT PRICE OF 15.4 CENTS PER GALLON, SUBJECT TO THE CONDITIONS STATED IN THE INVITATION FOR PROPOSALS. FEBRUARY 9, 1926, THERE WAS PROCURED FROM THE COMPANY, IN ACCORDANCE WITH THE ABOVE PROPOSALS, A DELIVERY OF 8,189 GALLONS OF GASOLINE, WHICH UPON TEST MADE BY THE UNITED STATES BUREAU OF STANDARDS WAS FOUND NOT TO COMPLY WITH THE SPECIFICATIONS, THE BUREAU OF STANDARDS REPORT BEING, IN PART,"SAMPLE DOES NOT COMPLY WITH FEDERAL SPECIFICATIONS BOARD STANDARD SPECIFICATION 2-C, BEING TOO HIGH IN SULFUR AND TOO DARK IN COLOR.' PRIOR TO THE RECEIPT OF THIS REPORT, HOWEVER, APPROXIMATELY 3,000 GALLONS OF THE GASOLINE FURNISHED HAD BEEN USED BY THE GOVERNMENT, AND APPARENTLY NO DEMAND WAS MADE UPON THE COMPANY TO REMOVE THE REMAINDER OF THE GASOLINE FROM THE STORAGE TANK ON THE GOVERNMENT PREMISES.

IT IS EVIDENT THAT THE DELIVERY BY THE COMPANY OF A PRODUCT WHICH DID NOT COMPLY WITH THE SPECIFICATIONS WAS NOT SUCH A DELIVERY AS REQUIRED ITS ACCEPTANCE. THE GOVERNMENT HAD THE RIGHT TO REJECT THE GASOLINE, BUT APPARENTLY BECAUSE OF ITS NEEDS USED SOME OF THE GASOLINE BEFORE THE RESULT OF THE TESTS WAS REPORTED. THE PRINCIPLE OF CAVEAT EMPTOR IS NOT APPLICABLE, AND THERE IS NO LEGAL PRINCIPLE ENTITLING ONE DELIVERING A QUALITY INFERIOR TO THE QUALITY SPECIFIED IN THE WRITTEN CONTRACT TO BE PAID ANY MORE THAN THE VALUE OF THAT WHICH IS DELIVERED. IT WOULD BE UNCONSCIONABLE AND AFFORD TOO GREAT OPPORTUNITY FOR IMPOSITION, AND THE FACT THAT SOME OR EVEN ALL OF THE SUPPLY WAS USED BEFORE THE INFERIORITY WAS ASCERTAINED CAN NOT CONCLUDE ASSERTING THE RIGHTS WHICH ARISE ACCORDINGLY. THE CONTRACTOR HAS NO GREATER RIGHT THAN TO BE PAID IN ACCORDANCE WITH WHAT HAS BEEN DELIVERED, AND NO APPARENT INJURY RESULTS TO THE CONTRACTOR IF THE SUPPLY HAS BEEN USED AND CAN NOT BE RETURNED, BUT, ON THE CONTRARY, THE CONTRACTOR IS BENEFITED BY THE SAVING OF THE EXPENSE THAT WOULD HAVE ATTENDED A REJECTION OF THE INFERIOR SUPPLY AND REPLACEMENT WITH QUALITY AS CONTRACTED FOR.

THE CLAIMANT IS NOT ENTITLED TO BE PAID THE PRICE FOR GASOLINE AS IF IN ACCORDANCE WITH THE SPECIFICATIONS, BUT BEING INFERIOR THERETO MAY NOW BE PAID ONLY A LESSER PRICE ON THE BASIS OF A QUANTUM VALEBAT. THE REASONABLE MARKET VALUE OF THE GASOLINE OF THE GRADE FURNISHED SHOULD BE ASCERTAINED AND PAYMENT MADE ACCORDINGLY.