B-143538, AUG. 23, 1960

B-143538: Aug 23, 1960

Additional Materials:

Contact:

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

 

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

TO GENERAL PAPER STOCK COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 8. WHICH WAS THE HIGHEST OF THREE BIDS RECEIVED. WAS ACCEPTED ON FEBRUARY 29. SHIPMENT OF THE BOXES WAS MADE BY THE GOVERNMENT. REFUSED TO ACCEPT THE CORRUGATED BOXES SINCE THEY WERE HEAVILY CONTAMINATED WITH PROHIBITIVE MATERIALS. YOU CLAIM THE AMOUNT OF $409.04 UPON THE BASIS THAT BOXES IN THIS CONDITION ARE LISTED ON THE MARKET AT ONLY $8 PER NET TON. YOU CONTEND THAT ITEM NO. 1 WAS MISREPRESENTED BY THE GOVERNMENT DISPOSAL OFFICER. - ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND . WHERE IS" AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE GOVERNMENT MAKES NO GUARANTY. 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.

B-143538, AUG. 23, 1960

TO GENERAL PAPER STOCK COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 8, 1960, WITH ENCLOSURE, REQUESTING REVIEW OF OUR SETTLEMENT DATED JULY 5, 1960, DISALLOWING YOUR CLAIM FOR $409.04 UNDER DEPARTMENT OF THE ARMY SPOT BID SALE INVITATION NO. 11-019-S-60-24.

IN RESPONSE TO THE INVITATION ISSUED BY THE PROPERTY DISPOSAL DIVISION, DECATUR SIGNAL DEPOT, DECATUR, ILLINOIS, YOU SUBMITTED A BID OFFERING TO PURCHASE ITEM NO. 1, COVERING 33 TONS OF FLATTENED AND BALED CORRUGATED BOXES, AT $19.10 A TON. YOUR BID, WHICH WAS THE HIGHEST OF THREE BIDS RECEIVED, WAS ACCEPTED ON FEBRUARY 29, 1960. YOUR MADE FULL PAYMENT, INCLUDING THE ADDITIONAL AMOUNT OF $73.48 FOR 3.85 TONS OVERAGE SUBSEQUENTLY FOUND TO EXIST IN ITEM NO. 1, AND SHIPMENT OF THE BOXES WAS MADE BY THE GOVERNMENT. BY LETTER DATED APRIL 1, 1960, YOU ADVISED THE DECATUR SIGNAL DEPOT THAT THE ALTON BOX BOARD COMPANY, TO WHOM YOU HAD AUTHORIZED THAT SHIPMENT BE MADE, REFUSED TO ACCEPT THE CORRUGATED BOXES SINCE THEY WERE HEAVILY CONTAMINATED WITH PROHIBITIVE MATERIALS. YOU CLAIM THE AMOUNT OF $409.04 UPON THE BASIS THAT BOXES IN THIS CONDITION ARE LISTED ON THE MARKET AT ONLY $8 PER NET TON.

YOU CONTEND THAT ITEM NO. 1 WAS MISREPRESENTED BY THE GOVERNMENT DISPOSAL OFFICER, THAT PRINTED CIRCULAR PS-59 OF THE NATIONAL ASSOCIATION OF WASTE MATERIAL DEALERS, INC., SHOWS WHAT EACH INDIVIDUAL PACK OF SUCH PAPER STOCK SHOULD CONTAIN, AND THAT ALL SCRAP ITEMS AS SOLD BY THE GOVERNMENT CANNOT BE VISUALLY INSPECTED PRIOR TO BID OPENING.

PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE SUBJECT CONTRACT, REFERRED TO IN THE SETTLEMENT, SPECIFICALLY PROVIDES THAT:

"2. CONDITION OF PROPERTY.--- 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; * * *.'

YOU STATE THAT YOU "CANNOT AGREE WITH THE "AS IS, WHERE IS" STATEMENT" AS A BASIS FOR DENIAL OF YOUR CLAIM. HOWEVER, IT HAS BEEN HELD BY THE COURTS THAT THE ABOVE LANGUAGE CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY; THAT THERE IS ESPECIALLY FOR APPLICATION THE PRINCIPLE THAT THE BUYER PURCHASES ENTIRELY AT HIS RISK; AND THAT RECOVERY CANNOT BE HAD AGAINST THE VENDOR ON THE GROUND THAT THE PURCHASER WAS MISTAKEN AS TO THE QUALITY, KIND, CHARACTER, QUANTITY, WEIGHT, SIZE OR DESCRIPTION OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; AND I. SHAPIRO AND COMPANY V. UNITED STATES, 66 CT.CL. 424; OVERSEAS NAVIGATION CORPORATION V. UNITED STATES, 131 CT.CL. 70. THERE IS NOTHING IN THE RECORD BEFORE US TO SHOW THAT BAD FAITH MAY BE IMPUTED TO THE PROPERTY DISPOSAL OFFICER IN CONNECTION WITH THE TRANSACTION. ANY CONDITION OF THE BOXES THAT VARIED FROM THAT WHICH THE DISPOSAL OFFICER THOUGHT EXISTED APPEARS TO HAVE RESULTED FROM NOTHING MORE THAN AN HONEST ERROR WHICH IS COMPLETELY COVERED BY THE DISCLAIMER OF WARRANTY CLAUSE.

WITH RESPECT TO THE STANDARDS SET FORTH FOR PAPER STOCK IN NATIONAL ASSOCIATION OF WASTE MATERIAL DEALERS, INC. CIRCULAR NO. PS-59, THE PERCENTAGES OF "OUTTHROWS" AND "PROHIBITIVE MATERIALS" CONTAINED THEREIN MIGHT VERY WELL GENERALLY BE ACCEPTED AS THE PREVAILING STANDARDS IN THE COMMERCIAL WORLD, BUT THE CONTENTS OF SUCH CIRCULAR CAN IN NOWISE HAVE ANY BEARING UPON THE RIGHTS AND LIABILITIES OF THE PARTIES FIXED BY THE SPECIFIC TERMS OF A GOVERNMENT CONTRACT, PARTICULARLY IN THE CASE OF A CONTRACT CONTAINING THE DISCLAIMER OF WARRANTY CLAUSE AS HERE.

REGARDING THE INSPECTION FEATURES OF THE TRANSACTION, THE RECORD SHOWS THAT YOU FAILED TO MAKE ANY INSPECTION OF THE CORRUGATED BOXES PRIOR TO SUBMITTING YOUR BID. IN THIS CONNECTION, PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT ALSO EXPRESSLY PROVIDED THAT "IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING.' MOREOVER, AS RECENTLY POINTED OUT IN THE CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, NOTWITHSTANDING THE DIFFICULTIES ATTENDANT UPON A THOROUGH INSPECTION OF SURPLUS PROPERTY OFFERED FOR SALE, IT IS INCUMBENT UPON A BIDDER TO MAKE THE SORT OF INSPECTION THAT IS EFFECTUAL.