B-132308, JUL. 30, 1957

B-132308: Jul 30, 1957

Additional Materials:

Contact:

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

 

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

TO PYRAMID CHEMICAL SALES COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 11. YOU CONCEDE THAT YOU PURCHASED THE MATERIAL ON A "PRICE FOR THE LOT" BASIS BUT YOU CLAIM THAT THE ORIGINAL SALES LETTER WAS MISLEADING IN THAT IT INDICATED A MINIMUM AND A MAXIMUM QUANTITY. THE CONTRACT PROVIDED THAT THE SALE WAS ON AN "AS IS" AND "WHERE IS" BASIS. IT SPECIFICALLY PROVIDED THAT "NO ADJUSTMENT FOR SUCH VARIATION WILL BE MADE WHEN AN AWARD IS MADE ON A "PRICE FOR THE LOT" BASIS.'. CONCLUDE THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT. HAVE NOTICE NOT TO EXPECT. IN DISPOSING OF SURPLUS MATERIAL THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS UNAWARE OF THE QUANTITY.

B-132308, JUL. 30, 1957

TO PYRAMID CHEMICAL SALES COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 11, 1957, REQUESTING A REVIEW OF OUR SETTLEMENT DATED JUNE 6, 1957, WHICH DISALLOWED YOUR CLAIM FOR $354.21 ARISING OUT OF CONTRACT NO. N151S-5615A, DATED SEPTEMBER 28, 1956, WITH THE DEPARTMENT OF THE NAVY.

THE RECORD SHOWS THAT BY YOUR BID SUBMITTED IN RESPONSE TO SALES LETTER NO. 86, DATED SEPTEMBER 26, 1956, WHICH REQUESTED BIDS ON 16,000 TO 20,000 GALLONS OF TRICHLOROETHYLENE TO BE SOLD AT THE NAVAL AIR TURBINE TEST STATION, TRENTON, NEW JERSEY, YOU OFFERED TO PURCHASE THE MATERIAL AT A PRICE FOR THE LOT OF $1,171.20. AFTER PAYMENT OF THE PURCHASE PRICE AND DELIVERY OF THE MATERIAL TO YOU, YOU FILED A CLAIM FOR REFUND OF PART OF THE PURCHASE PRICE BECAUSE THE EXACT QUANTITY AVAILABLE FOR SALE PROVED TO BE ONLY 11,161 GALLONS.

YOU CONCEDE THAT YOU PURCHASED THE MATERIAL ON A "PRICE FOR THE LOT" BASIS BUT YOU CLAIM THAT THE ORIGINAL SALES LETTER WAS MISLEADING IN THAT IT INDICATED A MINIMUM AND A MAXIMUM QUANTITY. HOWEVER, AS POINTED OUT IN THE SETTLEMENT OF JUNE 6, 1957, THE CONTRACT PROVIDED THAT THE SALE WAS ON AN "AS IS" AND "WHERE IS" BASIS, WITHOUT RECOURSE AGAINST THE GOVERNMENT, AND THAT THE GOVERNMENT MADE NO GUARANTY,WARRANTY, OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO QUANTITY, ETC. FURTHERMORE, WHILE ARTICLE 7 OF THE CONTRACT PROVIDED FOR AN ADJUSTMENT FOR VARIATION IN QUANTITY HAD THE CONTRACT BEEN LET ON A UNIT PRICE BASIS, IT SPECIFICALLY PROVIDED THAT "NO ADJUSTMENT FOR SUCH VARIATION WILL BE MADE WHEN AN AWARD IS MADE ON A "PRICE FOR THE LOT" BASIS.'

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT CONTRACT PROVISIONS SUCH AS HERE INVOLVED CONSTITUTE 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, 284 U.S. 676. THOSE CASES, AND OTHERS TOO NUMEROUS TO MENTION, INVOLVING VARIATIONS IN THE CONDITIONS OF THE PROPERTY WITH 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 WHATEVER. IN DISPOSING OF SURPLUS MATERIAL THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS UNAWARE OF THE QUANTITY, QUALITY AND CONDITION OF THE GOODS 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 MATERIAL SOLD IS ASSUMED BY THE PURCHASER AS ONE OF THE ELEMENTS OF THE BARGAIN. NOTWITHSTANDING THE FACT THAT THE ACTUAL QUANTITY OF THE MATERIAL MAY NOT HAVE CONFORMED TO THE AMOUNT DESCRIBED IN THE ORIGINAL INVITATION, 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 THIS CONNECTION, THE FACT THAT YOU AND OTHERS SUBMITTED ADDITIONAL QUOTATIONS PURSUANT TO WHAT THE DISPOSAL OFFICER DESCRIBES AS "A TEST OF THE MARKET," CANNOT SERVE TO ALTER THE RIGHTS AND LIABILITIES OF THE PARTIES TO THE CONTRACT.

THE MATTER OF GRANTING RELIEF TO PURCHASERS OF SURPLUS PROPERTY UNDER TERMS AND CONDITIONS SIMILAR TO THOSE HERE PRESENT HAS BEEN THE SUBJECT OF NUMEROUS DECISIONS OF OUR OFFICE AND THE COURTS, AND IT HAS BEEN UNIFORMLY HELD THAT RECOVERY CANNOT BE HAD IN SUCH CASES. SEE SACHS MERCANTILE COMPANY, INC. V. UNITED STATES, 78 C.CLS. 801; S. BREDY V. UNITED STATES, 64 C.CLS. 38; AND LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90. WHILE THOSE DECISIONS MAY APPEAR TO BE HARSH, THE GOVERNMENT HAS USED THE PLAINEST LANGUAGE POSSIBLE TO ADVISE PROSPECTIVE BIDDERS THAT IN SURPLUS SALES CONTRACTS SUCH AS HERE INVOLVED, THE PRINCIPLE OF CAVEAT EMPTOR WILL APPLY RIGIDLY.