B-130448, FEBRUARY 4, 1957, 36 COMP. GEN. 572

B-130448: Feb 4, 1957

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SALES - BIDS - MISTAKES - ERRONEOUS DESCRIPTION - INSPECTION NOT REVEALING TRUE CONDITION - CONTRACT CANCELLATION IN A SALE OF VARIOUS LOTS FROM A LARGE QUANTITY OF GOVERNMENT SURPLUS MATTRESSES WHICH WERE DESCRIBED AS " UNUSED. GOOD" AND OFFERED ON AN "AS IS" "WHERE IS" BASIS WITH EXPRESS DISCLAIMER OF WARRANTY AS TO DESCRIPTION BUT WHICH WERE ACTUALLY USED AND RENOVATED. A SALE OF PARTICULAR QUANTITIES OF ARTICLES TO BE TAKEN FROM A LARGER QUANTITY SO THAT THE ARTICLES TO BE DELIVERED CANNOT BE SPECIFICALLY IDENTIFIED AT THE TIME THE SALE IS MADE IMPOSES UPON THE SELLER AN OBLIGATION TO DELIVER ARTICLES WHICH CONFORM TO PROVISIONS OF CONTRACT IDENTIFYING THE SUBJECT MATTER. NOTWITHSTANDING THE SALE IS ON "AS IS" "WHERE IS" BASIS WITH EXPRESS DISCLAIMER OF WARRANTY AS TO "DESCRIPTION" OF GOODS.

B-130448, FEBRUARY 4, 1957, 36 COMP. GEN. 572

SALES - BIDS - MISTAKES - ERRONEOUS DESCRIPTION - INSPECTION NOT REVEALING TRUE CONDITION - CONTRACT CANCELLATION IN A SALE OF VARIOUS LOTS FROM A LARGE QUANTITY OF GOVERNMENT SURPLUS MATTRESSES WHICH WERE DESCRIBED AS " UNUSED, GOOD" AND OFFERED ON AN "AS IS" "WHERE IS" BASIS WITH EXPRESS DISCLAIMER OF WARRANTY AS TO DESCRIPTION BUT WHICH WERE ACTUALLY USED AND RENOVATED--- A FACT NOT DETERMINABLE UPON REASONABLE INSPECTION BY THE BIDDERS--- THE PURCHASERS BID UNDER A MISTAKE OF FACT WHICH, EVEN THOUGH UNILATERAL, WARRANTS RESCISSION OF THE CONTRACTS. A SALE OF PARTICULAR QUANTITIES OF ARTICLES TO BE TAKEN FROM A LARGER QUANTITY SO THAT THE ARTICLES TO BE DELIVERED CANNOT BE SPECIFICALLY IDENTIFIED AT THE TIME THE SALE IS MADE IMPOSES UPON THE SELLER AN OBLIGATION TO DELIVER ARTICLES WHICH CONFORM TO PROVISIONS OF CONTRACT IDENTIFYING THE SUBJECT MATTER, NOTWITHSTANDING THE SALE IS ON "AS IS" "WHERE IS" BASIS WITH EXPRESS DISCLAIMER OF WARRANTY AS TO "DESCRIPTION" OF GOODS.

TO THE SECRETARY OF THE NAVY, FEBRUARY 4, 1957:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 23, 1957, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER CONTRACTS NOS. N62204 702, N62204-688, N62204-684 AND N62204-679, ENTERED INTO ON NOVEMBER 26, 1956, WITH THE RESPECTIVE FIRMS OF TRANSCONTINENTAL SALES, INC., J. M. SIEGEL, I AND L SURPLUS MART AND VOLUME SALES COMPANY, EACH OF LOS ANGELES, CALIFORNIA, COVERING THE SALE OF VARYING QUANTITIES OF COTTON FILLED MATTRESSES, AS SPECIFIED, BY THE MARINE CORPS SUPPLY CENTER, BARSTOW, CALIFORNIA, MAY BE CANCELED.

IT APPEARS THAT BY INVITATION NO. B-6-57, ISSUED OCTOBER 30, 1956, THE MARINE CORPS SUPPLY CENTER ADVERTISED FOR SALE 72 ITEMS OF EXCESS PROPERTY. INCLUDED AMONG THOSE ITEMS WAS ITEM NO. 12, COVERING 40,000 MATTRESSES, COTTON FILLED, THE " CONDITION" OF WHICH WAS DESCRIBED AS " UNUSED, GOOD.' BIDS WERE INVITED FOR MINIMUM QUANTITIES OF 500 MATTRESSES. HENCE, THIS WAS NOT A SALE BY LOT, BUT BY QUANTITY. THE INVITATION CONTAINED THE USUAL " INSPECTION" AND " CONDITION OF PROPERTY" CLAUSES INCORPORATED INTO THE TERMS OF STANDARD FORM 114, REVISED, AUGUST 1950, URGING THE BIDDERS TO INSPECT THE PROPERTY PRIOR TO BIDDING THEREON, AND DISCLAIMING WARRANTIES AS TO "QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION," BUT STATING THAT THE DESCRIPTIONS WERE BASED ON THE BEST INFORMATION AVAILABLE.

IT IS UNDERSTOOD THE MATTRESSES WERE STORED IN ONE LOCATION AND WERE PACKAGED IN BURLAP WRAPPED BUNDLES STORED IN BOXED PALLETS; ALSO, THAT THE EXTERIOR OF THE PACKAGES BORE LABELS INDICATING THE NAME OF THE ORIGINAL MANUFACTURER. THE BIDDERS INSPECTED THE MATTRESSES PRIOR TO SUBMITTING THEIR PROPOSALS, BUT IT IS ADMINISTRATIVELY REPORTED THAT SUCH INSPECTIONS WERE LIMITED TO ONLY A COMPARATIVELY FEW MATTRESSES WHICH HAD BEEN BROKEN OPEN FROM THE BUNDLES, AND THAT THE FACT THAT THE MATTRESSES WERE ACTUALLY RENOVATED OR REBUILT RATHER THAN NEW WAS NOT APPARENT UPON SUCH INSPECTION. THE FOUR BIDDERS HERE INVOLVED QUOTED VARYING PRICES AND RECEIVED AWARDS OF A TOTAL QUANTITY OF 33,500 MATTRESSES. AFTER THE AWARD, HOWEVER, ONE OF THE BIDDERS TOOK A SAMPLE BUNDLE OF FIVE MATTRESSES AND, AFTER A DETAILED EXAMINATION, FOUND THE MATTRESSES INSTEAD OF BEING USED," AS DESCRIBED, HAD BEEN RENOVATED. THIS FACT WAS APPARENTLY DETERMINABLE ONLY BY RIPPING OPEN SEAMS AND DISCOVERING SMALL HOLES WHICH APPEARED IN THE MATTRESS COVERS WHERE THE ORIGINAL TYING HAD BEEN REMOVED. FURTHER INSPECTION AT THE SUPPLY CENTER REVEALED THAT APPROXIMATELY NINETY PERCENT OF THE MATTRESSES WERE USED AND RENOVATED.

UNDER CALIFORNIA LAW, RENOVATED MATTRESSES CANNOT BE SOLD TO RESIDENTS OF THAT STATE UNTIL THEY HAVE BEEN COMPLETELY STERILIZED, AND THE INVITATION EXPRESSLY CALLED THE ATTENTION OF BIDDERS TO THE APPLICABILITY OF THAT LAW TO USED MATERIALS INCLUDED IN THE SALE.

WHILE IT IS TRUE THE PROPERTY IN QUESTION WAS OFFERED FOR SALE ON AN "AS IS," "WHERE IS" BASIS, WITH AN EXPRESS DISCLAIMER OF WARRANTY AS TO THE "DESCRIPTION" OF THE GOODS, THE LAW NEVERTHELESS RECOGNIZES THAT THE SELLING OF A PARTICULAR QUANTITY OF ARTICLES TO BE TAKEN FROM A LARGER MASS, SO THAT THE PARTICULAR PIECES TO BE DELIVERED CANNOT BE SPECIFICALLY IDENTIFIED AT THE TIME THE SALE IS MADE, MAY IMPOSE UPON THE SELLER AN OBLIGATION TO DELIVER ARTICLES WHICH CONFORM TO THE PROVISIONS OF THE CONTRACT IDENTIFYING THE SUBJECT MATTER. SEE UNITED STATES V. KOPLIN, 24 F.2D 840. ALSO, CONSIDERING THE NATURE OF THE PROPERTY INVOLVED IN THIS INSTANCE AND THE FACT THAT THE TRUE CONDITION WAS APPARENTLY NOT ASCERTAINABLE BY SUCH INSPECTION AS REASONABLY COULD HAVE BEEN ALLOWED, WE BELIEVE THAT THE PURCHASERS BID UNDER SUCH MISTAKE, EVEN THOUGH UNILATERAL, AS WOULD BE REGARDED BY THE COURTS AS GROUNDS FOR RESCISSION OF THE CONTRACTS OF SALE.

ACCORDINGLY, THE CONTRACTS ABOVE IDENTIFIED MAY BE CANCELED, AND THE BID DEPOSITS REFUNDED TO THE PURCHASERS.

THE PAPERS WHICH ACCOMPANIED YOUR LETTER OF JANUARY 23, 1957, ARE RETURNED HEREWITH.