B-133576, SEP. 18, 1957

B-133576: Sep 18, 1957

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INCORPORATED: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 6. IT IS YOUR CONTENTION THAT THE CHEESE WAS OFFERED SUBJECT TO INSPECTION AND ACCEPTANCE. THAT DUE TO REJECTION OF THE PRODUCT TENDERED NO BINDING AGREEMENT WAS EVER CONSUMMATED. YOU INQUIRED BY TELEGRAM WHEN YOU MIGHT EXPECT TO RECEIVE THE PURCHASE ORDER COVERING THE INVOLVED AGREEMENT AND THAT THE ABOVE-NUMBERED PURCHASE ORDER CONTRACTS WERE RECEIVED AND ACCEPTED BY YOU ON AUGUST 9. TWO OTHER LOTS OFFERED BY YOU IN REPLACEMENT ALSO WERE REJECTED FOR THE SAME REASON. IS A CONDITIONAL CONTRACT. MAY NOT CREATE ANY LIABILITY IN THE EVENT THEY ARE SUBSEQUENTLY DETERMINED TO BE UNSUITABLE. YOU WERE AWARE OF THE FACT THAT A WRITTEN CONTRACT.

B-133576, SEP. 18, 1957

TO CENTRAL CHEESE COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 6, 1957, PROTESTING THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY IN RAISING A CHARGE OF $960.82 AGAINST YOUR ACCOUNT, REPRESENTING EXCESS COSTS INCURRED BY THE UNITED STATES IN THE PURCHASE OF A QUANTITY OF CHEESE FROM OTHER SOURCES AS A RESULT OF YOUR DEFAULT UNDER PURCHASE ORDER CONTRACTS NOS. DA 11-027-QM-48876 AND DA 11-027-QM-48877. IT IS YOUR CONTENTION THAT THE CHEESE WAS OFFERED SUBJECT TO INSPECTION AND ACCEPTANCE; THAT DUE TO REJECTION OF THE PRODUCT TENDERED NO BINDING AGREEMENT WAS EVER CONSUMMATED; AND THAT UNDER THOSE CIRCUMSTANCES NO LEGAL BASIS EXISTS TO HOLD YOU RESPONSIBLE FOR ANY DAMAGES ARISING OUT OF THE TRANSACTION.

THE FACTS IN THE CASE, AS DISCLOSED BY THE RECORD BEFORE US, APPEAR TO BE THAT ON JULY 30, 1952, IN RESPONSE TO AN INFORMAL SOLICITATION OF A GOVERNMENT PROCUREMENT OFFICIAL YOU OFFERED TO FURNISH 60,000 POUNDS OF GRADE AA CHEESE. ON AUGUST 7, 1952, YOU INQUIRED BY TELEGRAM WHEN YOU MIGHT EXPECT TO RECEIVE THE PURCHASE ORDER COVERING THE INVOLVED AGREEMENT AND THAT THE ABOVE-NUMBERED PURCHASE ORDER CONTRACTS WERE RECEIVED AND ACCEPTED BY YOU ON AUGUST 9, 1952. THEREAFTER, YOU TENDERED FOR INSPECTION TWO CARLOADS OF CHEESE WHICH FAILED TO MEET THE SPECIFICATIONS INCORPORATED IN AND MADE A PART OF THE CONTRACTS. TWO OTHER LOTS OFFERED BY YOU IN REPLACEMENT ALSO WERE REJECTED FOR THE SAME REASON, WITH THE RESULT THAT IT BECAME NECESSARY FOR THE GOVERNMENT TO PROCURE THE SUPPLIES ELSEWHERE BECAUSE OF YOUR DEFAULT.

CONCEDING THE CORRECTNESS OF YOUR STATEMENT AS TO WHAT TRANSPIRED INITIALLY BETWEEN YOU AND THE PROCUREMENT OFFICER, SUCH CONTENTIONS APPEAR TO BE IMMATERIAL IN VIEW OF SUBSEQUENT EVENTS. OF COURSE, AN OFFER TO FURNISH EXISTING GOODS OR SUPPLIES SUBJECT TO A FUTURE CONTINGENCY, SUCH AS A LATER DETERMINATION TO BE MADE BY THE PROSPECTIVE BUYER AS TO THEIR ACCEPTABILITY, IS A CONDITIONAL CONTRACT, AND MAY NOT CREATE ANY LIABILITY IN THE EVENT THEY ARE SUBSEQUENTLY DETERMINED TO BE UNSUITABLE. IN THIS CASE, HOWEVER, YOU WERE AWARE OF THE FACT THAT A WRITTEN CONTRACT, OR CONTRACTS, WOULD BE AWARDED TO YOU AS EVIDENCED BY YOUR REFERRED-TO INQUIRY. THE TWO CITED CONTRACTS, SETTING FORTH THE USUAL CONDITIONS AND STIPULATIONS RELATING TO SUCH PROCUREMENTS, WERE FORWARDED TO AND ACCEPTED BY YOU. IF THE WRITTEN PROVISIONS THEREOF WERE IN CONFLICT WITH YOUR UNDERSTANDING AS TO THE TERMS UNDER WHICH YOUR OFFER WAS INFORMALLY MADE, YOU HAD AN APPARENT RIGHT TO RESCIND THE CONTRACTS. ON THE CONTRARY, HOWEVER, YOU ACCEPTED THEM WITHOUT PROTEST AND TWICE ATTEMPTED TO PERFORM THUS ESTABLISHING YOUR WILLINGNESS TO BE BOUND BY THEIR TERMS. POSSIBLY, A DIFFERENT CONCLUSION MIGHT BE REACHED IF THE CONTRACTS HAD BEEN PROMPTLY REJECTED, BUT THERE IS NO LEGAL BASIS FOR A PARTY TO ACCEPT A CONTRACT, ATTEMPT PERFORMANCE, AND THEREAFTER DENY LIABILITY FOR THE CONSEQUENCES OF HIS BREACH AS IF NO UNDERTAKING HAD BEEN CREATED.

IN VIEW OF THE FACTS OF THIS CASE AND APPLICABLE LAW, IT MUST BE CONCLUDED THAT THE CHARGES RAISED AGAINST YOUR ACCOUNT WERE PROPER AND THEREFORE SUCH ACTION WILL NOT BE DISTURBED.