B-140992, NOV. 19, 1959

B-140992, NOV. 19, 1959

TO UNITED SMELTING AND REFINING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 30, 1959, REQUESTING REVIEW OF OUR SETTLEMENT DATED SEPTEMBER 18, 1959, WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR AN ADJUSTMENT UNDER DEPARTMENT OF THE NAVY CONTRACT NO. N189S-45688A (S), DATED MAY 20, 1959.

IT APPEARS THAT IN RESPONSE TO INVITATION NO. B-177-59-189, ISSUED BY THE NAVAL SUPPLY CENTER, U.S. NAVAL BASE, NORFOLK, VIRGINIA, YOU SUBMITTED A BID DATED MAY 11, 1959, OFFERING TO PURCHASE ITEM NO. 15145, COVERING 55,716 POUNDS OF CLEAN COPPER ALLOY CONSISTING OF 97 1/2 PERCENT COPPER AND 2 1/2 PERCENT NICKEL, IN THE FORM OF VARIOUS SIZED ROTATING BANDS, AT $0.2778 A POUND, OR FOR A TOTAL PRICE OF $15,477.90. YOUR BID WAS ACCEPTED AS TO ITEM NO. 15145, AMONG OTHERS, IN THE TOTAL AMOUNT OF $78,439.74. UPON RECEIPT OF THE ROTATING BANDS AT YOUR WAREHOUSE, A CHEMICAL ANALYSIS TEST WAS CONDUCTED ON A NUMBER OF THEM. YOU ADVISED THAT THE TEST SHOWED AT LEAST THREE TYPES OF BANDS, ONE OF WHICH CONTAINED OVER 10 PERCENT ZINC. UPON THE BASIS THAT COPPER ZINC ROTATING BANDS HAVE A MUCH LOWER VALUE THAN THE BANDS ADVERTISED FOR SALE AND IN VIEW OF THE LABOR AND HANDLING COST ALLEGEDLY INCURRED IN SEGREGATING THE SEVERAL TYPES OF BANDS, YOU FILED A CLAIM EITHER TO RETURN ALL OF THE ROTATING BANDS COVERED BY ITEM NO. 15145 AND BE REIMBURSED ALL ATTENDANT TRANSPORTATION CHARGES, HANDLING CHARGES, ETC., OR THAT YOU BE PERMITTED TO RETAIN THE ITEM AT A REDUCED PRICE OF $0.0350 A POUND WHICH WOULD INCLUDE THE OVER-ALL REDUCED VALUE OF THE ROTATING BANDS, TOGETHER WITH THE EXPENSE INCURRED.

IT APPEARS FROM YOUR LETTER OF SEPTEMBER 30, 1959, THAT THE REQUEST FOR REVIEW OF OUR SETTLEMENT DATED SEPTEMBER 18, 1959, IS PRIMARILY BASED ON YOUR CONTENTIONS THAT THE ROTATING BANDS WERE CONTAMINATED AND, THEREFORE, WERE NOT AS REPRESENTED IN THE INVITATION; THAT A THOROUGH INSPECTION WAS IMPRACTICAL, IF NOT IMPOSSIBLE; AND THAT A WARRANTY WAS CONSTITUTED BY THE DESCRIPTION OF "CLEAN COPPER ALLOY," ETC., AND, THEREFORE, THERE IS NO BASIS FOR REFERRING TO THE MATERIAL AS "SCRAP.'

IN A MATTER COVERED BY A CONTRACT OF SALE SUCH AS THAT PRESENT IN THE INSTANT CASE, THE PRINCIPAL ISSUE IS WHETHER THE GOVERNMENT DOES OR DOES NOT WARRANT THE PROPERTY SOLD. IN THIS CONNECTION, THERE IS REITERATED HERE THE FOLLOWING PERTINENT PART OF ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF CONTRACT NO. W189S-45688A (S):

"ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE GOVERNMENT MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE, AND NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED; * *

IT CONSISTENTLY HAD BEEN HELD BY THE COURTS AND OUR OFFICE THAT, IN THE ABSENCE OF BAD FAITH, OR WHERE IT IS NOT SHOWN THAT THE PROPERTY SOLD WAS OTHER THAN THAT ADVERTISED FOR SALE, SUCH LANGUAGE CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY. ALSO, ORDINARILY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION, THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION; BUT WHERE THERE EXISTS AN EXPRESS DISCLAIMER OF WARRANTY--- AS IN THE INSTANT CASE--- NO SUCH WARRANTY MAY BE IMPLIED FROM THE DESCRIPTION OF THE PROPERTY SOLD, AS THE DISCLAIMER OF WARRANTY EXTENDS TO AND INCLUDES THE DESCRIPTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W.R. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; AND I. SHAPIRO AND COMPANY V. UNITED STATES, 66 C.CLS. 424. IT APPEARS PARTICULARLY SIGNIFICANT TO NOTE THAT THE LANGUAGE OF THE FOREGOING DISCLAIMER OF WARRANTY EXPRESSLY REFERS TO, AMONG OTHERS, THE "KIND" AND "CHARACTER" OF THE MATERIAL INVOLVED. THERE IS NOTHING IN THE RECORD BEFORE US TO SHOW OR EVEN INDICATE, NOR DO YOU ALLEGE, THAT BAD FAITH MAY BE ATTRIBUTED TO THE GOVERNMENT IN THE TRANSACTION. THE RECORD DOES SHOW, HOWEVER, THAT NOTWITHSTANDING ONE OF THE TYPES OF THE ROTATING BANDS ALLEGEDLY CONTAINED A SMALLER PERCENTAGE OF COPPER CONTENT THAN DESCRIBED IN THE INVITATION, YOU DID RECEIVE COPPER ALLOY ROTATING BANDS WHICH WAS THE SPECIFIC PROPERTY ADVERTISED FOR SALE. FURTHER DESCRIPTIVE DETAILS IN INVITATIONS OF THIS KIND, SUCH AS PERCENTAGES OF METAL CONTENT, ETC., ARE CONSIDERED AS NOTHING MORE THAN A MERE EXPRESSION OF OPINION AS TO WHAT THE GOVERNMENT SALES OFFICER BELIEVES THE PROPERTY FOR SALE TO BE. UNDER SUCH CIRCUMSTANCES, THERE MAY NOT BE ACCEPTED YOUR CONTENTION THAT THE ROTATING BANDS WERE MISREPRESENTED AND THAT AN IMPLIED WARRANTY EXISTED AS TO DESCRIPTION THEREOF.

REGARDING YOUR OBJECTION TO OUR REFERENCE TO ITEM NO. 15145 AS "SCRAP" MATERIAL, IT WOULD APPEAR SUFFICIENT TO MERELY POINT OUT THAT WHILE THE HEADING FOR THIS ITEM WAS DESCRIBED AS "CLEAN COPPER ALLOY," AS YOU CONTEND, YET THERE IS SHOWN ON THE COVER PAGE OF THE INVITATION UNDER THE HEADING "CONDITION OF MATERIAL" THE NOTATION "APA (SCRAP)," SHOWING CLEARLY, OF COURSE, THAT ALL ITEMS INCLUDED IN THE INVITATION WERE CONSIDERED BY THE GOVERNMENT SALES OFFICER TO BE OF A SCRAP NATURE.

WITH RESPECT TO YOUR CONTENTIONS REGARDING THE APPLICABLE INSPECTION FEATURES OF THE CONTRACT, ARTICLE 1 OF THE GENERAL SALE TERMS AND CONDITIONS THEREOF PROVIDES, AMONG OTHERS, THAT "IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING.' OUR OFFICE CONSISTENTLY HAS HELD THAT WHERE A BIDDER, WHO IS COMPLETELY APPRISED OF SUCH AN EXPRESS INSPECTION RESTRICTION IN THE INVITATION AS WELL AS HAVING FULL KNOWLEDGE OF THE DISCLAIMER OF WARRANTY CLAUSE, SUBMITS BID, EITHER WITHOUT MAKING ANY INSPECTION OR WITHOUT MAKING AN ADEQUATE OR THOROUGH INSPECTION, EVEN THOUGH THE LATTER CIRCUMSTANCE IS DUE TO THE INSPECTION BEING IMPRACTICABLE, IF NOT IMPOSSIBLE, IT ONLY REASONABLY MAY BE CONCLUDED THAT THE BIDDER ELECTED TO ASSUME ANY RISK WHICH MIGHT EXIST BY REASON OF A VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. AS WAS STATED BY THE COURT IN THE CASE OF PAXTON MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, IT IS INCUMBENT UPON A BIDDER TO MAKE THE SORT OF INSPECTION THAT IS EFFECTUAL. THE FURTHER CONCLUSION NECESSARILY MUST FOLLOW, OF COURSE, THAT HAD YOU NOT BEEN WILLING TO ASSUME SUCH A RISK YOU WOULD NOT HAVE SUBMITTED A BID IN THE FIRST INSTANCE.