B-129285, OCT. 9, 1956

B-129285: Oct 9, 1956

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000 WAS INTENDED FOR ITEM NO. 3 OR ITEM NO. 4. ITEM NO. 2 WAS THEN RESOLD FOR $17. SUCH AMOUNT WAS RETAINED FROM YOUR DEPOSIT OF $5. 500 WAS FORWARDED TO YOU BY THE DEPARTMENT OF THE NAVY ON TWO SEPARATE OCCASIONS. IS THE FACT THAT YOU EXECUTED THE "MEMORANDUM PF PURCHASE" WHEREIN YOU UNQUALIFIEDLY ACKNOWLEDGED THAT YOU WERE THE HIGHEST BIDDER AND THAT YOU WERE DECLARED THE PURCHASER OF ITEM NO. 2 FOR $20. THERE IS NO QUESTION AS TO THE LEGALITY OF THE CONTRACTUAL OBLIGATION THAT BECAME EFFECTIVE UNDER SUCH CIRCUMSTANCES. ANY ERROR THAT MIGHT HAVE BEEN MADE IN YOUR BID. - NONE IS ESTABLISHED IN THE RECORD. - WOULD NOT AFFECT SUCH OBLIGATION WHICH WAS PREDICATED UPON A VALID ACCEPTANCE OF YOUR BID MADE IN GOOD FAITH AND WITHOUT ANY NOTICE OF PROBABLE ERROR THEREIN.

B-129285, OCT. 9, 1956

TO E. J. BUTTON AND SONS:

THE MATTER OF YOUR CLAIM FOR REFUND OF $5,000 DEPOSITED IN CONNECTION WITH A PURCHASE UNDER AUCTION SALE INVITATION NO. B-15-55, ISSUED BY THE NAVAL CONSTRUCTION BATTALION CENTER, DAVISVILLE, RHODE ISLAND, HAS BEEN REFERRED HERE BY THE DEPARTMENT OF THE NAVY FOR APPROPRIATE ACTION.

THE RECORD SHOWS THAT YOU SUBMITTED THE HIGH BID OF $20,000 AT THE PUBLIC AUCTION FOR ITEM NO. 2 OF THE SALE CATALOG, COVERING ONE CRAWLER CRANE. YOU POSTED A $5,000 DEPOSIT, AS REQUIRED, AND YOU EXECUTED A "MEMORANDUM OF PURCHASE" IN CONNECTION WITH THE TRANSACTION. THEREAFTER, YOU INFORMED THE CONTRACTING OFFICER THAT YOUR BID OF $20,000 WAS INTENDED FOR ITEM NO. 3 OR ITEM NO. 4, COVERING CRAWLER CRANE ASSEMBLIES AND UPON BEING OFFERED THE ALTERNATIVE OF EITHER CARRYING OUT THE SALE AS ORIGINALLY CONSUMMATED OR ASSUMING THE DIFFERENCE BETWEEN ANY RESALE PRICE RECEIVED AND YOUR PRICE OF $20,000, YOU CHOSE THE LATTER. ITEM NO. 2 WAS THEN RESOLD FOR $17,500 WHICH ESTABLISHED YOUR RESALE OBLIGATION OF $2,500. SUCH AMOUNT WAS RETAINED FROM YOUR DEPOSIT OF $5,000 AND A REFUND OF THE BALANCE OF $2,500 WAS FORWARDED TO YOU BY THE DEPARTMENT OF THE NAVY ON TWO SEPARATE OCCASIONS. YOU RETURNED THE CHECK EACH TIME CLAIMING A REFUND OF THE FULL AMOUNT OF YOUR DEPOSIT.

THERE CAN BE NO DOUBT FROM THE FACTS AND EVIDENCE OF RECORD THAT YOU ACCEPTED THE "KNOCK-DOWN" OF THE AUCTIONEER AND MADE THE REQUIRED DEPOSIT OF 25 PERCENT OF YOUR BID. AS A STILL FURTHER, AND PERHAPS EVEN MORE IMPORTANT, AFFIRMATION OF THE CONTRACT OF SALE, IS THE FACT THAT YOU EXECUTED THE "MEMORANDUM PF PURCHASE" WHEREIN YOU UNQUALIFIEDLY ACKNOWLEDGED THAT YOU WERE THE HIGHEST BIDDER AND THAT YOU WERE DECLARED THE PURCHASER OF ITEM NO. 2 FOR $20,000. THUS, THERE IS NO QUESTION AS TO THE LEGALITY OF THE CONTRACTUAL OBLIGATION THAT BECAME EFFECTIVE UNDER SUCH CIRCUMSTANCES. ANY ERROR THAT MIGHT HAVE BEEN MADE IN YOUR BID--- NONE IS ESTABLISHED IN THE RECORD--- WOULD NOT AFFECT SUCH OBLIGATION WHICH WAS PREDICATED UPON A VALID ACCEPTANCE OF YOUR BID MADE IN GOOD FAITH AND WITHOUT ANY NOTICE OF PROBABLE ERROR THEREIN.

IN VIEW OF THE FOREGOING, IT IS THE OPINION OF OUR OFFICE THAT THERE MIGHT PROPERLY BE APPLIED TO THE TRANSACTION ARTICLE 7 OF THE GENERAL CONDITIONS AND TERMS OF THE SALE WHICH PROVIDES, AMONG OTHER THINGS, THAT IN THE EVENT THE PURCHASER FAILS TO CARRY OUT ANY OF THE TERMS OF THE CONTRACT THE PURCHASER'S DEPOSIT SHALL BE RETAINED BY THE GOVERNMENT AS LIQUIDATED DAMAGES. NOTWITHSTANDING THIS PROVISION THE RECORD DISCLOSES THAT THE CONTRACTING OFFICER ORALLY AGREED THAT ANY DEFICIT TO THE GOVERNMENT UPON RESALE OF ITEM NO. 2 WOULD BE CHARGEABLE TO YOUR ACCOUNT. SUCH AGREEMENT WAS IN VIOLATION OF ARTICLE 13 OF THE SALE TERMS WHICH PROVIDES THAT ANY ORAL STATEMENT BY ANY REPRESENTATIVE OF THE GOVERNMENT CHANGING ANY CONDITIONS OF THE SALE WOULD NOT CONFER ANY RIGHT UPON THE PURCHASER. HOWEVER, SINCE THE DAMAGES SUFFERED BY THE GOVERNMENT APPEAR TO HAVE BEEN SUBSTANTIALLY LIQUIDATED BY SUCH AN ARRANGEMENT, INSTRUCTIONS ARE TODAY BEING ISSUED TO THE CLAIMS DIVISION OF OUR OFFICE FOR PAYMENT OF THE AMOUNT OF $2,500.