B-141852, MAY 4, 1960

B-141852: May 4, 1960

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TO GREAT WESTERN PAPER COMPANY: REFERENCE IS MADE TO A LETTER DATED JANUARY 7. THE RECORD INDICATES THAT YOU REQUESTED A SAMPLE OF THE BOOKS WHICH WAS SELECTED BY THE DISPOSAL OFFICER AT THE DEPOT AND FORWARDED TO YOU ON MARCH 31. YOUR BID OF $25.30 PER TON ON ITEM 1 WAS ACCEPTED. THE RULE WITH RESPECT TO SUCH TRANSACTIONS IS ANNOUNCED AS FOLLOWS: "IT IS NOT TO BE ASSUMED THAT EVERY SALE WHERE A SAMPLE IS SHOWN IS A SALE BY SAMPLE. IT MUST APPEAR THAT IT WAS A TERM OF THE CONTRACT. THAT THE SALE WAS BY SAMPLE.'. THAT BOTH MUTUALLY UNDERSTOOD THAT THEY WERE DEALING WITH THE SAMPLE WITH AN UNDERSTANDING THAT THE BULK WAS TO BE LIKE IT. THE PRINCIPLE IS STATED AS FOLLOWS: "IT MUST NOT BE ASSUMED THAT IN EVERY CASE WHERE A SAMPLE IS SHOWN A WARRANTY OF THIS SORT ARISES.

B-141852, MAY 4, 1960

TO GREAT WESTERN PAPER COMPANY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 7, 1960, FROM JAMES I. SHAMBERG, REQUESTING, IN YOUR BEHALF, REVIEW OF SETTLEMENT DATED DECEMBER 23, 1959, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF $487.38 REPRESENTING AN ADJUSTMENT OF PRICE ON ITEM 1, CONSISTING OF 60 TONS OF MIXED BOOKS PACKED IN CARDBOARD CARTONS, PURCHASED FROM THE UNITED STATES NAVAL SUPPLY DEPOT CLEAR FIELD, OGDEN, UTAH, UNDER CONTRACT NO. N665S-43180, DATED APRIL 13, 1959.

THE RECORD INDICATES THAT YOU REQUESTED A SAMPLE OF THE BOOKS WHICH WAS SELECTED BY THE DISPOSAL OFFICER AT THE DEPOT AND FORWARDED TO YOU ON MARCH 31, 1959. YOUR BID OF $25.30 PER TON ON ITEM 1 WAS ACCEPTED, PAYMENT MADE, AND DELIVERY EFFECTED. LATER YOU ALLEGED THAT DUE TO MISREPRESENTATION ON THE PART OF THE GOVERNMENT, REGARDING THE QUALITY OF THE PAPER, YOU OCCASIONED A LOSS IN THE AMOUNT NOW CLAIMED IN THE RESALE OF THE PAPER TO THE WALDORF PAPER PRODUCTS COMPANY. SPECIFICALLY, YOU CONTEND THAT 22 TONS OF THE PAPER RECEIVED DID NOT CONFORM IN QUALITY TO THE SAMPLES FORWARDED TO YOU AT YOUR REQUEST.

WE BELIEVE THAT THE TRANSACTION CANNOT BE REGARDED AS A SALE BY SAMPLE IN THE LEGAL SENSE, SUCH AS WOULD CARRY WITH IT AN IMPLIED WARRANTY AS TO QUALITY AND KIND. IN TIFFANY ON SALES, SECOND EDITION, PAGE 263, THE RULE WITH RESPECT TO SUCH TRANSACTIONS IS ANNOUNCED AS FOLLOWS:

"IT IS NOT TO BE ASSUMED THAT EVERY SALE WHERE A SAMPLE IS SHOWN IS A SALE BY SAMPLE; FOR THE SELLER MAY SHOW A SAMPLE AND REFUSE TO SELL BY IT, REQUIRING THE BUYER TO INSPECT THE BULK AND TO FORM HIS OWN JUDGMENT, OR THE BUYER MAY DECLINE TO RELY ON THE SAMPLE AND REQUIRE AN EXPRESS WARRANTY. IT MUST APPEAR THAT IT WAS A TERM OF THE CONTRACT, EXPRESS OR IMPLIED, THAT THE SALE WAS BY SAMPLE.'

TO CONSTITUTE A SALE BY SAMPLE IN THE LEGAL SENSE OF THAT TERM IT MUST APPEAR THAT THE PARTIES CONTRACTED SOLELY IN REFERENCE TO THE SAMPLE OR ARTICLE EXHIBITED, AND THAT BOTH MUTUALLY UNDERSTOOD THAT THEY WERE DEALING WITH THE SAMPLE WITH AN UNDERSTANDING THAT THE BULK WAS TO BE LIKE IT. WOOD V. MICHAUD, 63 MINN. 478.

IN WILLISTON ON CONTRACTS, REVISED EDITION, SECTION 1004, THE PRINCIPLE IS STATED AS FOLLOWS:

"IT MUST NOT BE ASSUMED THAT IN EVERY CASE WHERE A SAMPLE IS SHOWN A WARRANTY OF THIS SORT ARISES. THUS THE SELLER MAY TAKE A SAMPLE OF THE GOODS, BEING HIMSELF IGNORANT AS TO THEIR QUALITY, AND MAY REPRESENT TO THE BUYER MERELY THAT THE SAMPLE WHICH HE EXHIBITED WAS FAIRLY TAKEN FROM THE BULK. IF THIS REPRESENTATION IS TRUE AND THE SELLER NEITHER REPRESENTS NOR PROMISES THAT THE GOODS SHALL BE EQUAL TO THE SAMPLE, HE WOULD NOT BE LIABLE IF THE BULK PROVED, IN PARTS, NOT TO BE EQUAL TO THE SAMPLE. WHETHER A SELLER WHO EXHIBITS A SAMPLE DOES REPRESENT THAT THE BULK IS LIKE THE SAMPLE, OR MERELY THAT THE SAMPLE WAS HONESTLY AND PROPERLY TAKEN, AND THAT THE BUYER MUST TAKE HIS OWN RISK AS TO THE BULK, IS A QUESTION OF FACE IN EACH CASE.'

THE WAREHOUSE FOREMAN, PROPERTY DISPOSAL BRANCH, UTAH GENERAL DEPOT, STATED THAT THE BOOKS UNDER ITEM 1 CONSISTED OF VARIOUS PUBLICATIONS, AMONG WHICH WERE ORDINANCE MANUALS M 15-1, VOLUMES 1, 2, 3, AND 4. THESE VOLUMES APPEARED IDENTICAL AND, THEREFORE, ONLY ONE SAMPLE OF THESE BOOKS WAS FORWARDED TO YOU, NAMELY, VOLUME 2. THE OTHER THREE VOLUMES WERE NOT EXAMINED BECAUSE IT APPEARED UNNECESSARY, DUE TO THE FACT THAT THEY WERE IN THE SAME SERIES AND, IN APPEARANCE, WERE ALIKE. THE SELECTION OF THE SAMPLES WAS BELIEVED BY THE WAREHOUSE FOREMAN TO BE REPRESENTATIVE OF THE BOOKS IN THE WAREHOUSE, AND WE FIND IN THE RECORD NO BASIS FOR HOLDING THAT THERE WAS ANY UNDERTAKING BY THE GOVERNMENT THAT THE BOOKS SOLD WOULD CORRESPOND WITH THE SAMPLE FURNISHED.

THE CONTRACTING OFFICER AND PROPERTY DISPOSAL OFFICER BOTH STATE THAT TO THE BEST OF THEIR RECOLLECTION AND INFORMATION NO TELEPHONE CONVERSATION WITH REGARD TO THE SAMPLE TOOK PLACE WITH YOU PRIOR TO THE OPENING OF BIDS.

APART FROM THE FOREGOING, IT IS A FUNDAMENTAL PRINCIPLE OF THE LAW OF CONTRACTS THAT WHERE A CONTRACT IS REDUCED TO WRITING EVERYTHING THAT THE WRITING DOES NOT CONTAIN IS PRESUMABLY EXCLUDED FROM THE CONTRACT, AND EVIDENCE IS NOT ADMISSIBLE TO SHOW THAT THE VENDOR WARRANTED THE GOODS ORALLY DURING THE PREVIOUS NEGOTIATIONS, OR WHEN THE INSTRUMENT WAS EXECUTED; OR EVEN THAT THE SALE WAS BY SAMPLE AND THE BULK DOES NOT CORRESPOND THEREWITH. SEE BOUVIER'S LAW DICTIONARY, PAGE 3432, QUOTING FROM HARE ON CONTRACTS 532; 1 WILLISTON ON SALES 215; 46 AM.JUR. 465; ID. 554; 55 C.J. 710; KIMBALL-CLARK COMPANY V. CROSBY, 185 N.W. 172; PLANO MANUFACTURING COMPANY V. ROOT, 54 N.W. 924; HAMILTON IRON AND STEEL CO. V. GROVELAND MINING COMPANY, 233 F. 388; IMPERIAL PORTRAIT COMPANY V. BRYAN, 36 S.E. 291; WIENER V. WHIPPLE, 10 N.W. 433. IN THE CASE OF IMPERIAL PORTRAIT COMPANY V. BRYAN, THE COURT STATED:

"* * * IF THE CONTRACT HAS BEEN COMMITTED TO WRITING, AND NO REFERENCE IS MADE TO A SAMPLE, IT IS CLEAR THAT CONFORMITY OF THE BULK TO THE SAMPLE IS NOT AN AGREED TERM. * * *"

IN THE PRESENT CASE NEITHER THE INVITATION FOR BIDS PURSUANT TO WHICH THE CONTRACT WAS MADE, NOR THE RESULTING CONTRACT, CONTAINED ANY WARRANTY AS TO THE KIND OF BOOKS OR ANY REFERENCE WHATEVER TO A SAMPLE. ON THE CONTRARY, THE CONTRACT EXPRESSLY PROVIDED IN ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS THAT NO WARRANTY, EXPRESS OR IMPLIED, WAS MADE BY THE GOVERNMENT AND THAT "THIS IS NOT A SALE BY SAMPLE.' SINCE IT IS WELL SETTLED THAT AN EXPRESS DISCLAIMER OF WARRANTY, SUCH AS IS CONTAINED IN THE INSTANT CONTRACT, VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALE TRANSACTION, WE FIND NO BASIS FOR HOLDING THAT THIS WAS A SALE BY SAMPLE, OR THAT THERE WAS AN IMPLIED WARRANTY THAT THE BOOKS WOULD CONFORM TO THE SAMPLES SENT YOU. CF. AMERICAN ELASTICS, INC. V. UNITED STATES, 187 F.2D 109.

YOUR COUNSEL ARGUES THAT THE TERMS OF THE INVITATION FOR BIDS WERE SUPERSEDED BY THE FURNISHING OF THE SAMPLE AND THAT THE DISCLAIMER OF WARRANTY WAS THEREFORE INEFFECTIVE. ASIDE FROM THE FACT THAT YOUR BID WAS SUBMITTED UNDER THE WRITTEN INVITATION AND CONTAINED NO EXCEPTION TO THE TERMS THEREIN STATED, THERE WAS NO AUTHORITY IN THE GOVERNMENT'S REPRESENTATIVES TO VARY THE TERMS OF THE SOLICITATION. REGULATIONS CONCERNING THE SALE OF SURPLUS PROPERTY OF THE GOVERNMENT REQUIRE THE DISCLAIMER OF WARRANTY, AND IT IS SETTLED LAW THAT PERSONS DEALING WITH AGENTS OF THE GOVERNMENT ARE BOUND TO KNOW THE AUTHORITY OF SUCH AGENTS AND THE LIMITATIONS THEREON. SEE FEDERAL CROP INSURANCE CORP. V. MERRILL, 332 U.S. 380. IN DISPOSING OF SURPLUS PROPERTY, THE GOVERNMENT IS NOT ENGAGING IN COMMERCIAL TRADE, AND HAS DELIBERATELY ADOPTED THE POLICY OF OFFERING SUCH PROPERTY ON TERMS WHICH REQUIRE THE BIDDER TO ASSUME ALL RISKS INCIDENT THERETO. THE ONLY OBLIGATION ON THE GOVERNMENT IS TO EXERCISE GOOD FAITH, AND WE SEE NO EVIDENCE IN THIS INSTANCE OF ANY FAILURE IN THAT RESPECT. EVEN IF THE DESCRIPTION OF ITEM 1 IN THE INVITATION HAD EXPRESSLY STATED "BOOK PAPER," YOU WOULD NOT HAVE BEEN ENTITLED TO ANY ADJUSTMENT. SEE PAXTON-MITCHELL CO. V. UNITED STATES, 172 F.SUPP. 463. IT DOES NOT APPEAR THAT THE FURNISHING OF A SAMPLE SHOULD HAVE ANY GREATER EFFECT.

FOR THE REASONS STATED, THE SETTLEMENT OF DECEMBER 23, 1959, IS SUSTAINED.