B-135417, MAR. 26, 1958

B-135417: Mar 26, 1958

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SAPERSTEIN AND SONS: REFERENCE IS MADE TO YOUR LETTER OF MARCH 11. REPRESENTING THE LOSS ALLEGED TO HAVE BEEN SUSTAINED IN DISPOSING OF SCRAP IRON TUBING PURCHASED FROM THE GOVERNMENT UNDER CONTRACT NO. IT WAS IN FACT NAE 8630. WHILE ORDINARILY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY OFFERED FOR SALE WILL CORRESPOND WITH THE DESCRIPTION. NO SUCH WARRANTY MAY BE IMPLIED WHERE THERE IS AN EXPRESS DISCLAIMER OF WARRANTY. THE DISCLAIMER OF WARRANTY CLAUSE IN THIS CASE EXPRESSLY PROVIDED THE DESCRIPTION OF THE PROPERTY BEING SOLD WAS BASED UPON THE BEST AVAILABLE INFORMATION AND THAT THE GOVERNMENT MADE "NO GUARANTY. CONCLUDE THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT.

B-135417, MAR. 26, 1958

TO J. SAPERSTEIN AND SONS:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 11, 1958, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED FEBRUARY 20, 1958, WHICH DISALLOWED YOUR CLAIM FOR REIMBURSEMENT OF $501.49, REPRESENTING THE LOSS ALLEGED TO HAVE BEEN SUSTAINED IN DISPOSING OF SCRAP IRON TUBING PURCHASED FROM THE GOVERNMENT UNDER CONTRACT NO. N164-7573.

THE RECORD SHOWS THAT IN RESPONSE TO INVITATION NO B-12-58-164, DATED AUGUST 2, 1957, YOU SUBMITTED A BID OFFERING TO PURCHASE ITEM 1 COVERING 47,000 POUNDS OF SCRAP IRON TUBING, SAE 1040, ANNEALED, AT $0.02267 PER POUND, OR FOR A TOTAL LOT PRICE OF $1,065.49. BY LETTER DATED SEPTEMBER 11, 1957, YOU ADVISED THAT A METALLURGIST HAD, SUBSEQUENT TO THE AWARD, MADE AN ASSAY OF THIS SCRAP TUBING AND FOUND THAT INSTEAD OF BEING SAE 1040, IT WAS IN FACT NAE 8630.

WHILE ORDINARILY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY OFFERED FOR SALE WILL CORRESPOND WITH THE DESCRIPTION, NO SUCH WARRANTY MAY BE IMPLIED WHERE THERE IS AN EXPRESS DISCLAIMER OF WARRANTY. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 25; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; AND I. SHAPIRO AND COMPANY V. UNITED STATES, 66 C.CLS. 424.

THE DISCLAIMER OF WARRANTY CLAUSE IN THIS CASE EXPRESSLY PROVIDED THE DESCRIPTION OF THE PROPERTY BEING SOLD WAS BASED UPON THE BEST AVAILABLE INFORMATION AND THAT THE GOVERNMENT MADE "NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO * * * OF ANY OF THE PROPERTY.' THE ABOVE COURT 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 PROPERTY THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS UNAWARE OF THE 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 CONDITION OF THE SURPLUS PROPERTY MAY NOT HAVE CONFORMED TO THE DESCRIPTION IN THE INVITATION, THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE CONTRACTING OFFICER OR HIS AGENTS ACTED IN OTHER THAN GOOD FAITH THROUGHOUT THE ENTIRE TRANSACTION. THE FACT THAT THE GOVERNMENT WAS MISTAKEN ABOUT THE QUALITY OF THE SCRAP METAL DOES NOT ENTITLE YOU TO RELIEF.

IN YOUR LETTER OF FEBRUARY 24, 1958, TO SENATOR CAPEHART YOU STATED AS FOLLOWS:

"WE ARE FULLY AWARE OF PARAGRAPH 2, ON ALL INVITATIONS TO GENERAL SALES TERMS AND CONDITIONS. BUT THE GOVERNMENT'S DEPOT DOES NOT GIVE EACH BIDDER SAMPLES OF THIS TUBING SO THE PROSPECTIVE BUYER CAN CHECK TO SEE THAT THEY ARE BIDDING ON SAE 1040 OR NAE 8630 UNTIL THE BUYER PAYS 100 PERCENT FOR THE AWARD BEFORE THE TUBING IS TURNED OVER TO THE BIDDER. ALL WE HAD TO GO ON THAT WAS ADVERTISED IN THE INVITATION BID NO. B-12-58-164, AND INSPECTED THE TUBING NO BIDDER CAN TELL IF THE TUBING IS SAE 1040 OR NAE 8630 UNTIL THE TUBING IS TAKEN TO A METALLURGIST FOR AN ASSAY WHICH ONE OF THE NAVAL AVIONICS FACILITY MEN DONE ALSO AFTER THE AWARD WAS MADE AND TUBING WAS PAID FOR 100 PERCENT.'

THIS STATEMENT IS IN APPARENT CONFLICT WITH THE REPORT OF NOVEMBER 21, 1957, FROM THE SALES CONTRACTING OFFICER, WHO, IN REFERRING TO YOUR CLAIM FOR REFUND, STATED:

"THIS PARTICULAR CONTRACTOR IS ALSO FULLY AWARE OF THE FACT THAT MILITARY SCRAP METAL STRUCTURALLY DOES NOT LEND ITSELF TO ANY SPECIFIC ALLOY. NORMALLY SCRAP IRON TUBING OFFERED BY THIS SALES OFFERING WOULD BE HIGH CARBON CONTENT, I.E. SAE 1030 OR SAE 1040. THIS PARTICULAR CONTRACTOR, AS WELL AS ALL OTHER SCRAP METAL BUYERS, IS EQUIPPED WITH CERTAIN TESTING FACILITIES SUCH AS A SPOT NICKEL TEST WHICH WOULD CONCLUSIVELY IDENTIFY THE SCRAP BEING INSPECTED.'

THE MATTER OF GRANTING RELIEF TO PURCHASES OF SURPLUS PROPERTY UNDER THE TERMS AND CONDITIONS SIMILAR TO THOSE HERE PRESENT HAS BEEN THE SUBJECT OF NUMEROUS DECISIONS OF OUR OFFICE AND OF 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. BRODY V. UNITED STATES, 64 C.CLS. 38; AND PARTICULARLY 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.

ACCORDINGLY, THERE APPEARS NO LEGAL BASIS FOR ALLOWING YOUR CLAIM AND THE SETTLEMENT OF FEBRUARY 20, 1958, IS SUSTAINED.