B-145558, JUL. 13, 1961

B-145558, JUL. 13, 1961

TO VOLUME ENTERPRISES:

REFERENCE IS MADE TO YOUR LETTER OF MAY 9, 1961, WITH ENCLOSURE, REQUESTING REVIEW OF THE GOVERNMENT'S CLAIM IN THE AMOUNT OF $826.47, REPRESENTING STORAGE CHARGES AND THE LOSS SUSTAINED BY THE GOVERNMENT BECAUSE OF YOUR DEFAULT UNDER SALES CONTRACT NO. 04-468 0I-/S/-426-58, AWARDED TO YOU ON APRIL 28, 1958, BY THE SHARPE GENERAL DEPOT, U.S. ARMY, LATHROP, CALIFORNIA.

IN RESPONSE TO INVITATION NO. AVI-04-468-S-58-21, YOU SUBMITTED A BID OFFERING TO PURCHASE FROM THE GOVERNMENT A QUANTITY OF SHOVEL HANDLES UNDER ITEM 18 FOR A LOT PRICE OF $756.12. YOUR BID, WHICH WAS ACCOMPANIED BY A BID DEPOSIT IN THE AMOUNT OF $247.80, WAS ACCEPTED AS TO ITEM 18 ON APRIL 28, 1958.

BY LETTERS DATED MAY 23 AND JUNE 5, 1958, THE CONTRACTING OFFICER REQUESTED THAT YOU PAY FOR AND PICK UP THE MATERIAL COVERED BY ITEM 18 AND ADVISED YOU THAT IF YOU FAILED TO DO SO THE GOVERNMENT WOULD CONSIDER THE CONTRACT IN DEFAULT AND WOULD RESELL THE MATERIAL IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 5 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT. YOU WERE ALSO ADVISED THAT STORAGE CHARGES WOULD ACCRUE IN ACCORDANCE WITH PARAGRAPH 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT.

IN A LETTER DATED JUNE 16, 1958, YOU ADVISED THE CONTRACTING OFFICER THAT YOU HAD BID ON THE SHOVEL HANDLES FOR SOMEONE ELSE AND THAT THAT PERSON HAD REFUSED TO TAKE DELIVERY OF THE SHOVEL HANDLES FOR THE REASON THAT THE HANDLES WERE OBSOLETE. YOU ALSO STATED THAT THERE WAS NO BLAME ATTACHED TO THE GOVERNMENT ON THIS TRANSACTION AND THAT ALL OF THE FAULT AND LOSS WAS YOURS. YOU REQUESTED THAT THE SHOVEL HANDLES BE RESOLD OR, IF POSSIBLE, THAT YOU BE PERMITTED TO TAKE PARTIAL DELIVERY OF THE PROPERTY EQUAL TO THE AMOUNT OF YOUR BID DEPOSIT.

THE SHOVEL HANDLES COVERED BY ITEM 18 WERE SUBSEQUENTLY RESOLD UNDER INVITATION NO. AVI-04-513-S-58-27 AT A LOSS TO THE GOVERNMENT OF $714.12, WHICH AMOUNT PLUS STORAGE CHARGES OF $360.15, MAKING A TOTAL OF $1,074.27, WAS CHARGED TO YOUR ACCOUNT. YOUR BID DEPOSIT OF $247.80 WAS APPLIED BY THE GOVERNMENT TO THE INDEBTEDNESS, THEREBY REDUCING IT TO $826.47. SUBSEQUENTLY, AFTER DEMAND WAS MADE ON YOU FOR PAYMENT OF THE AMOUNT OF $826.47, THE MATTER WAS REFERRED TO OUR OFFICE FOR COLLECTION.

YOU STATE THAT YOU BID ON ITEM 18 WITH THE UNDERSTANDING THAT THE SHOVEL HANDLES WERE OF FAIRLY RECENT MANUFACTURE, THAT THE HANDLES ARE OBSOLETE, AND THAT THE VALUE OF THE HANDLES IS INDICATED BY THE FACT THAT THE AMOUNT OF $42 ONLY WAS REALIZED ON THE RESALE OF THAT ITEM.

THE PROPERTY WAS SOLD TO YOU SUBJECT TO THE FOLLOWING PERTINENT CONDITIONS:

"1. INSPECTION.--- BIDDERS ARE INVITED AND URGED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACES AND TIMES SPECIFIED IN THE INVITATION. THE GOVERNMENT WILL NOT BE OBLIGED TO FURNISH ANY LABOR FOR SUCH PURPOSE. NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING.

"2. CONDITION OF PROPERTY.--- ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND ,WHERE IS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION, BUT 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; THIS IS NOT A SALE BY SAMPLE.'

UNDER THE ABOVE-QUOTED PROVISIONS OF THE CONTRACT WHICH CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY, THE PURCHASER BUYS ENTIRELY AT HIS OWN RISK AND RECOVERY CANNOT BE HAD AGAINST THE VENDOR ON THE GROUND THAT THE PURCHASER WAS MISTAKEN AS TO KIND, CHARACTER, DESCRIPTION, ETC., OF THE PROPERTY. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525 AND LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90. SEE, ALSO, 29 COMP. GEN. 310 AND 32 ID. 181. WHERE, AS HERE, PROSPECTIVE PURCHASERS ARE URGED TO INSPECT THE PROPERTY FOR SALE AND ARE WARNED THAT IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM, IT HAS BEEN HELD THAT THE GOVERNMENT OWES NO HIGHER DEGREE OF CARE OR DUTY TO BIDDERS OTHER THAN TO DELIVER THE EXACT PROPERTY WHICH WAS AVAILABLE FOR INSPECTION. SEE PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463.

CONCERNING YOUR CONTENTION THAT THE AMOUNT CHARGEABLE TO YOU BY REASON OF YOUR DEFAULT SHOULD BE LIMITED TO THE AMOUNT OF YOUR BID DEPOSIT OF $247.80, YOU WILL OBSERVE THAT SUCH BID DEPOSIT WAS FURNISHED IN COMPLIANCE WITH ARTICLE 4 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT WHICH READS, IN PERTINENT PART:

"4. BID GUARANTEE.--- THE BIDDER AGREES THAT * * *. IN THE EVENT OF ANY DEFAULT BY THE BIDDER OR ANY FAILURE BY THE BIDDER TO COMPLY WITH ALL TERMS AND CONDITIONS OF THIS CONTRACT, ANY DEPOSIT MADE BY THE BIDDER MAY BE APPLIED BY THE GOVERNMENT TO ANY LOSS, COST, AND EXPENSE OCCASIONED TO THE GOVERNMENT THEREBY, INCLUDING ANY LOSS, COST, AND EXPENSE INCURRED IN SELLING THE PROPERTY AND INCLUDING ANY DIFFERENCE BETWEEN THE AMOUNT SPECIFIED IN THE BID AND THE AMOUNT FOR WHICH THE GOVERNMENT MAY SELL THE PROPERTY, IF THE LATTER AMOUNT BY LESS THAN THE FORMER. * * *"

THUS, THE PURPOSE OF THE REQUIRED BID DEPOSIT WAS TO SAFEGUARD THE GOVERNMENT AGAINST POSSIBLE LOSS WHICH MIGHT RESULT FROM YOUR DEFAULT OR YOUR FAILURE TO PERFORM. SEE 23 COMP. GEN. 234, 235; 34 ID. 300, 303. UPON YOUR DEFAULT UNDER THE INSTANT CONTRACT, THE AMOUNT OF YOUR BID DEPOSIT OF $247.80 WAS CORRECTLY APPLIED TOWARD THE LIQUIDATION OF YOUR TOTAL INDEBTEDNESS TO THE UNITED STATES OF $1,074.27, ARISING OUT OF YOUR DEFAULT, AS WAS SPECIFICALLY AUTHORIZED BY THE EXPRESS TERMS OF YOUR CONTRACT.

THERE IS NO LEGAL BASIS UPON WHICH YOU MAY BE GRANTED RELIEF. YOU CHOSE TO BREACH YOUR AGREEMENT WITH THE GOVERNMENT FOR THE REASON REITERATED IN YOUR LETTERS, NAMELY, THE LOSS OF A SALE TO A THIRD PARTY. HAVING DONE SO, YOU ARE LEGALLY LIABLE TO COMPENSATE THE GOVERNMENT FOR THE DAMAGES IT SUSTAINED. SINCE THIS INDEBTEDNESS HAS BEEN PENDING FOR APPROXIMATELY THREE YEARS, IT IS REQUESTED THAT THE AMOUNT OF $826.47 BE PROMPTLY SENT TO THIS OFFICE. IF THE AMOUNT INDICATED IS NOT RECEIVED HERE WITHIN 30 DAYS FROM THE DATE OF THIS LETTER, WE WILL HAVE NO ALTERNATIVE BUT TO REFER THE MATTER TO THE DEPARTMENT OF JUSTICE FOR COLLECTION IN THE USUAL MANNER.