B-127030, MAR. 22, 1956

B-127030: Mar 22, 1956

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO LEHMAN METALS COMPANY: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 2. YOU CONTEND THAT SINCE YOUR BID WAS BASED ON MATERIAL DESCRIBED AS MONEL WHICH SHOULD CONTAIN 65 PERCENT NICKEL. THAT THE MATERIAL IS OFFERED FOR SALE "AS IS" AND "WHERE IS. THAT THE DESCRIPTION IS BASED UPON THE BEST AVAILABLE INFORMATION. THAT NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED. CONCLUDE THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT. HAVE NOTICE NOT TO EXPECT. IN DISPOSING OF SURPLUS PROPERTY THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS UNAWARE OF THE QUALITY OR CONDITION OF THE MATERIALS IT SELLS.

B-127030, MAR. 22, 1956

TO LEHMAN METALS COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 2, 1956, REQUESTING RECONSIDERATION OF SETTLEMENT DATED JANUARY 31, 1956, WHICH DISALLOWED YOUR CLAIM FOR $246.62 ALLEGED TO BE DUE BY REASON OF A MISDESCRIPTION OF THE PROPERTY PURCHASED BY YOU FROM THE DEPARTMENT OF THE ARMY UNDER INVITATION NO. CIVENG (S/-22-079-55-15, DATED APRIL 12, 1955. YOU CONTEND THAT SINCE YOUR BID WAS BASED ON MATERIAL DESCRIBED AS MONEL WHICH SHOULD CONTAIN 65 PERCENT NICKEL--- WHEREAS THE MATERIAL YOU RECEIVED CONTAINS ONLY 9.11 PERCENT NICKEL--- YOU SHOULD BE PERMITTED TO RETURN THE INFERIOR BARS WITH FULL CREDIT FOR THE PURCHASE PRICE PAID, OR RETAIN THE MATERIAL WITH A CORRESPONDING ADJUSTMENT IN THE CONTRACT PRICE.

PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT PROVIDES, IN PERTINENT PART, THAT THE MATERIAL IS OFFERED FOR SALE "AS IS" AND "WHERE IS," WITHOUT RECOURSE AGAINST THE GOVERNMENT, AND THAT THE DESCRIPTION IS BASED UPON THE BEST AVAILABLE INFORMATION, BUT THE GOVERNMENT MAKES NO GUARANTY, WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO KIND, CHARACTER OR QUALITY THEREOF, OR ITS FITNESS FOR ANY USE OR PURPOSE, AND THAT NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED.

IN CONSTRUING THAT CONTRACT STIPULATION IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND BY OUR OFFICE THAT SUCH A PROVISION CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY AND NO WARRANTY MAY BE IMPLIED. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525 AND W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 204 U.S. 676. THOSE CASES, ALSO INVOLVING A VARIANCE IN THE CONDITION OF THE PROPERTY WITH THAT OF THE DESCRIPTION IN THE INVITATION, CONCLUDE THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT, ANY WARRANTIES WHATSOEVER. IN DISPOSING OF SURPLUS PROPERTY THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS UNAWARE OF THE QUALITY OR CONDITION OF THE MATERIALS 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 MATERIALS SOLD IS ASSUMED BY THE BUYER AS ONE OF THE ELEMENTS OF THE BARGAIN.

YOU STATE THAT AS A RULE NO SAMPLES ARE PERMITTED TO BE TAKEN SO IT WOULD HAVE BEEN IMPOSSIBLE FOR YOU TO DETERMINE THE QUALITY OF THE MATERIAL BEFOREHAND, AND THAT YOU HAD TO RELY ON THE INFORMATION FURNISHED. WHILE SUCH A SITUATION IS FULLY UNDERSTOOD, IT IS APPARENT THAT UNDER THOSE CIRCUMSTANCES NO LEGAL LIABILITY WOULD ATTACH TO THE GOVERNMENT IN THE ABSENCE OF BAD FAITH ON THE PART OF THE DISPOSAL OFFICER OR HIS AGENTS. YOU WERE AWARE THAT SALVAGE PROPERTY WAS BEING OFFERED FOR SALE AND IF YOU WERE NOT WILLING TO ASSUME THE RISK INVOLVED, YOUR ALTERNATIVE WOULD HAVE BEEN NOT TO SUBMIT A BID. THE RECORD SHOWS THAT THE DISPOSAL OFFICERS WERE NOT AWARE OF THE TRUE NATURE OF THE MATERIAL AND THEREFORE WERE REQUIRED TO RELY UPON THEIR STOCK RECORDS, THE BEST EVIDENCE AVAILABLE, IN LISTING THE ITEM IN THE INVITATION. NOTWITHSTANDING SUCH MISDESCRIPTION, THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE CONTRACTING OFFICER OR HIS AGENTS ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE ENTIRE TRANSACTION.

IN VIEW OF THE FACTS OF RECORD AND THE APPLICABLE LAW THERE IS NO LEGAL BASIS UPON WHICH ANY PART OF THE PURCHASE PRICE MAY BE REFUNDED, AND THEREFORE THE SETTLEMENT OF JANUARY 31, 1956, MUST BE SUSTAINED.