B-125500, OCT. 17, 1955

B-125500: Oct 17, 1955

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TO THE HONORABLE SECRETARY OF THE NAVY: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 14. FOR THE SALE OF CERTAIN GOVERNMENT-OWNED MATERIAL WAS BASED. WAS DESCRIBED IN THE INVITATION AS FOLLOWS: "MISC. THE PROSPECTIVE BIDDERS WERE ADVISED THAT THE ABOVE-LISTED MATERIAL WAS "APPARENTLY UNUSED AND USED. IN GOOD TO FAIR CONDITION" AND THAT THE ACQUISITION COST WAS $873.40. UNIT PRICES WERE REQUESTED AND THE FIVE BIDS RECEIVED WERE $70 (MR. THE NUMBER OF UNITS INDICATED WAS 10. SINGER WAS $700. DISCOVERING THAT THERE WAS ONLY ONE SEWING MACHINE AVAILABLE. SINGER REQUESTED REFUND OF THE $700 PAID BY HIM ON THE GROUND THAT THE ITEM IN QUESTION WAS TO HAVE CONSISTED OF 10 SEWING MACHINES. ORDINARILY WHERE THE EXPRESS TERMS AND CONDITIONS OF A SALE ARE SIMILAR TO THOSE HERE INVOLVED.

B-125500, OCT. 17, 1955

TO THE HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 14, 1955, WITH ENCLOSURES, RELATIVE TO AN ALLEGED ERROR IN A BID SUBMITTED BY IRVING W. SINGER ON WHICH CONTRACT NO. N228S-10940, DATED JULY 15, 1955, FOR THE SALE OF CERTAIN GOVERNMENT-OWNED MATERIAL WAS BASED. YOU REQUEST A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO THE CONTRACTOR'S REQUEST FOR CANCELLATION OF THE AWARD AND REFUND OF THE PURCHASE PRICE.

ITEM NO. 84, ONE OF 114 ITEMS OFFERED FOR SALE AT THE NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

"MISC. MATERIAL, CONSISTING OF THE FOLLOWING:

1 MACHINE, SEWING, ELECTRIC, LIGHT DUTY,

SERIAL NO. 111W154, TABLE MODEL, MFD, BY

SINGER SEWING MACHINE CO.

6 JUGS, INSULATED, WATER, METAL INSIDE WITH

SCREW CAP, 1 GAL. CAPACITY.

1 COOLER, DRINKING WATER, SIZE 10.

2 FANS, TUBE AXIAL, 2000 CFM, 1725 RPM, 4

BLADE PROPELLER, STEEL.'

THE PROSPECTIVE BIDDERS WERE ADVISED THAT THE ABOVE-LISTED MATERIAL WAS "APPARENTLY UNUSED AND USED, IN GOOD TO FAIR CONDITION" AND THAT THE ACQUISITION COST WAS $873.40. UNIT PRICES WERE REQUESTED AND THE FIVE BIDS RECEIVED WERE $70 (MR. SINGER), $5, $2, $1, AND $0.61 PER UNIT. THE NUMBER OF UNITS INDICATED WAS 10. IN CONFORMITY WITH THE INVITATION THE EXTENDED PRICE QUOTED BY MR. SINGER WAS $700.

APPARENTLY RECOGNIZING THE POSSIBILITY OF ERROR IN THE BID, THE CONTRACTING OFFICER REQUESTED MR. SINGER TO SEND IN A LETTER WITHIN TEN DAYS CONFIRMING HIS BID OF $70 EACH ($700 TOTAL) ON THAT ITEM. BY LETTER OF JULY 9, 1955, MR. SINGER VERIFIED HIS BID AND INQUIRED AS TO WHEN HE COULD ,MAKE ARRANGEMENTS TO PICK UP THE MACHINES IN QUESTION.' AFTER PAYING THE BALANCE OF THE PURCHASE PRICE, AND DISCOVERING THAT THERE WAS ONLY ONE SEWING MACHINE AVAILABLE, MR. SINGER REQUESTED REFUND OF THE $700 PAID BY HIM ON THE GROUND THAT THE ITEM IN QUESTION WAS TO HAVE CONSISTED OF 10 SEWING MACHINES.

ORDINARILY WHERE THE EXPRESS TERMS AND CONDITIONS OF A SALE ARE SIMILAR TO THOSE HERE INVOLVED, THE COMMON-LAW DOCTRINE OF CAVEAT EMPTOR APPLIES, AND IF A BID BE SUBMITTED WITHOUT PRIOR INSPECTION OF THE PROPERTY, A VALID AND BINDING CONTRACT WILL RESULT FROM AN ACCEPTANCE OF THE BID IN GOOD FAITH. A SUBSEQUENT CLAIM OF THE CONTRACTOR FOR RELIEF MAY NOT BE ALLOWED UPON HIS DISCOVERY AFTER THE AWARD THAT THE PURCHASED PROPERTY DOES NOT COME UP TO HIS EXPECTATIONS. HOWEVER, REGARDLESS OF THE TERMS AND CONDITIONS OF THE SALE, GOOD FAITH ON THE GOVERNMENT'S PART, BOTH IN DESCRIBING THE MATERIAL TO BE SOLD AND IN THE ACCEPTANCE OF THE PROSPECTIVE PURCHASER'S BID, IS AN ESSENTIAL PREREQUISITE OF A VALID AND BINDING CONTRACT. SEE TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151, 156 AND M. SAMUEL AND SONS V. UNITED STATES, 373, 380.

ALTHOUGH THE RECORD CLEARLY INDICATES THAT MR. SINGER INTENDED TO BID $70 PER EACH UNIT (A TOTAL OF $700) FOR ITEM NO. 84, IT IS ALSO ESTABLISHED SATISFACTORILY THAT HE MADE A BONA FIDE MISTAKE DUE TO CONFUSION, NOT AS TO THE PRICE, BUT AS TO THE UNIT. THERE IS LITTLE, IF ANY, ROOM FOR DOUBT THAT HE WAS INTERESTED ONLY IN THE PURCHASE OF SEWING MACHINES FOR USE IN HIS BUSINESS AND THAT, BY THE BID HE SUBMITTED, HE ACTUALLY PROPOSED TO PURCHASE SEWING MACHINES. THE REFERENCE TO "MACHINES" IN HIS LETTER CONFIRMING THE BID PRICE LENDS CREDENCE TO HIS SUBSEQUENT ALLEGATION OF ERROR. WHILE THE CONFUSION ON HIS PART NO DOUBT WOULD HAVE BEEN AVERTED IF HE HAD INSPECTED THE PROPERTY PRIOR TO BIDDING, AS HE WAS ADMONISHED TO DO, IT CAN JUST AS FAIRLY BE SAID THAT HIS ERROR MAY HAVE BEEN INDUCED IN A LARGE MEASURE BY THE AMBIGUITY IN THE GOVERNMENT'S FORM OR ARRANGEMENT OF THE ITEM IN THE PRINTED INVITATION FOR BIDS, AND ITS REQUIREMENT THAT A UNIT PRICE BE QUOTED BY EACH BIDDER, WHICH PRICE PRESUMABLY SHOULD BE APPLICABLE TO EACH OF THE TEN UNITS OF MISCELLANEOUS MATERIAL.

IT APPEARS THAT THE BIDDER'S CONFUSION AND RESULTANT ERROR COULD HAVE BEEN AVOIDED IF THE GOVERNMENT HAD REQUESTED A LOT BID PRICE FOR THE ITEM, INCLUDING ALL THE MATERIALS WITHIN THE LOT, SINCE IT SEEMS CLEAR THAT THE GOVERNMENT HAD NO INTENTION OF MAKING A DIVISIVE AWARD. SUCH BEING THE CASE, THERE IS PERCEIVED NO USEFUL PURPOSE THAT COULD BE SERVED IN THE INSTANT CASE BY REQUIRING UNIT PRICE BIDS. FOR EXAMPLE, THERE CAN BE NO DOUBT THAT OF $420 ($70 EACH) FOR THE "6 JUGS" OF "1 GAL. CAPACITY" AS FURTHER DESCRIBED UNDER THE ITEM WHICH, ACCORDING TO THE GOVERNMENT'S SET- UP, CONSTITUTED 6 OF THE 10 UNITS INVOLVED. WHILE ITEM NO. 84 APPARENTLY WAS INTENDED TO COVER A SPECIFIED NUMBER OF EACH ARTICLE OF MATERIAL OF DIFFERENT TYPE OFFERED FOR SALE, THE FIRST UNIT DESCRIBED WAS A SEWING MACHINE, AND THE FIGURE "10" INDICATING THE NUMBER OF UNITS WAS INSERTED IN THE AMOUNT COLUMN ONLY SLIGHTLY ABOVE, AND ALMOST DIRECTLY OPPOSITE TO THE MACHINE DESCRIPTION, WHEREAS NOTHING APPEARS IN THE AMOUNT COLUMN OPPOSITE THE DESCRIPTION OF ANY OF THE OTHER ARTICLES. IT IS FURTHER NOTED THAT THE UNIT BID PRICE AND THE EXTENSION THEREOF INSERTED BY THE BIDDER IS TO THE RIGHT OF THE QUANTITY "10" AND DIRECTLY OPPOSITE THE DESCRIPTION OF THE SEWING MACHINE, APPARENTLY TO THE EXCLUSION OF ANY OF THE OTHER ARTICLES LISTED UNDER THE ITEM.

FOR THE REASONS ABOVE INDICATED, WE THINK THAT THE BIDDER'S CONSTRUCTION OF THE ITEM AS OFFERING 10 MACHINES FOR SALE WAS NOT UNREASONABLE, AND THAT HIS BID ACTUALLY WAS SUBMITTED ON THAT BASIS. MOREOVER, THERE IS BELIEVED TO BE JUSTIFIED THE VIEW THAT THE CONTRACTING OFFICER HAD AT LEAST CONSTRUCTIVE KNOWLEDGE OF ERROR IN MR. SINGER'S BID AT THE TIME OF AWARD, ESPECIALLY IN THE LIGHT OF HIS STATEMENT OF AUGUST 12, 1955, THAT DOCUMENTARY EVIDENCE AVAILABLE TO HIM PERTAINING TO ITEM NO, 84, INDICATED THE SEWING MACHINE "WITHIN THAT LOT" WAS IN A SALVAGE CONDITION WITH AN ESTIMATED VALUE OF $150. IT WOULD SEEM THAT HE SHOULD HAVE KNOWN THAT THE DIFFERENCE BETWEEN $150 AND $700, OR $550, WAS AN EXORBITANTLY EXCESSIVE PRICE FOR THE REMAINDER OF THE MATERIAL "WITHIN THAT LOT.' THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES, DID NOT CONSUMMATE A VALID AND BINDING CONTRACT.

ACCORDINGLY, IT APPEARING THAT THE LOT OF MATERIAL IN QUESTION STILL IS IN THE POSSESSION OF THE GOVERNMENT, THE AWARD SHOULD BE CANCELED AND THE PURCHASE PRICE OF $700 REFUNDED TO MR. IRVING SINGER, THE BIDDER.