B-146506, AUGUST 9, 1961, 41 COMP. GEN. 97

B-146506, AUGUST 9, 1961, 41 COMP. GEN. 97

SALES - DISCLAIMER OF WARRANTY - ERRONEOUS DESCRIPTION - TRADE USAGES ALTHOUGH THE DESCRIPTION OF GOVERNMENT SURPLUS PROPERTY AS SCRAP LEAD IN AN INVITATION WHICH CONTAINS AN EXPRESS DISCLAIMER OF WARRANTY AND URGES BIDDERS TO INSPECT THE PROPERTY BEFORE THE SUBMISSION OF BIDS DOES NOT CONFORM TO THE DESCRIPTION OF VARIOUS TYPES OF SCRAP LEAD IN TRADE PERIODICALS, THE GOVERNMENT IS NOT UNDER ANY OBLIGATION TO MAKE THE DESCRIPTION CONFORM TO POSSIBLE TRADE USAGES, AND A PURCHASER WHO FAILS TO INSPECT PROPERTY WHICH IS ACTUALLY SCRAP LEAD, ALTHOUGH DESCRIBED IN TRADE PERIODICALS AS SCRAP BATTERY LEAD, MAY NOT BE EXCUSED FROM PERFORMANCE UNDER THE CONTRACT NOR HAVE ITS BID DEPOSIT RETURNED ON THE BASIS OF A MISDESCRIPTION OF THE ARTICLE.

TO THE SECRETARY OF THE INTERIOR, AUGUST 9, 1961:

REFERENCE IS MADE TO YOUR LETTER OF JULY 24, 1961, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN ON THE REQUEST OF THE SURPLUS TIRE SALES FOR A REFUND OF ITS DEPOSIT OF $250 IN CONNECTION WITH INVITATION FOR BIDS NO. 60-24 ISSUED BY THE ALASKA RAILROAD ON AUGUST 23, 1960, FOR THE SALE OF VARIOUS ITEMS OF SCRAP.

AMONG THE ITEMS OFFERED FOR SALE BY THE INVITATION WERE 32,332 POUNDS OF SCRAP LEAD FOR WHICH BIDDERS WERE REQUESTED TO BID ON A LOT BASIS. THE SURPLUS TIRE SALES WAS HIGH BIDDER AT ITS BID OF $1,273.28 AND THE NEXT HIGH BID IS REPORTED AS HAVING BEEN IN THE AMOUNT OF $730.79. THE EXACT DATE OF AWARD OF THE CONTRACT TO SURPLUS IS NOT SHOWN IN THE PAPERS ACCOMPANYING YOUR LETTER BUT PRIOR TO AWARD SURPLUS WROTE A LETTER DATED SEPTEMBER 23, 1960, IN WHICH IT REQUESTED CERTAIN INFORMATION IN CONNECTION WITH THE SALE. IN RESPONSE THERETO SURPLUS WAS ADVISED THAT (1) THE LEAD WAS ALL SCRAP BATTERY LEAD TAKEN FROM SCRAP BATTERIES; (2) THE LEAD WAS IN 50-GALLON OPEN TOP STEEL DRUMS; AND (3) THE ONLY CONTAMINATION NOTICEABLE IN THE LEAD WAS THAT CAUSED BY ACID USUALLY FOUND IN BATTERY LEAD. ON SEPTEMBER 30, 1960, SURPLUS NOTIFIED THE CONTRACTING OFFICER THAT IT DESIRED TO WITHDRAW ITS BID OR HAVE THE PRICE ADJUSTED TO THE TRUE VALUE OF THE PRODUCT SOLD. IT REQUESTED THAT THE AMOUNT OF THE BID DEPOSIT OF $250 BE RETURNED AND THE CONTRACT BE CANCELED. ON OCTOBER 3, 1960, THE CONTRACTING OFFICER NOTIFIED SURPLUS THAT ITS BID COULD NOT BE WITHDRAWN AND POINTED OUT THAT PARAGRAPH 2 OF THE SPECIAL SALES TERMS AND CONDITIONS PROVIDES THAT FAILURE TO INSPECT THE PROPERTY OFFERED FOR SALE WILL NOT BE ACCEPTABLE AS A BASIS FOR ANY CLAIM AGAINST THE GOVERNMENT IN THE EVENT OF AN AWARD.

IT HAS BEEN THE CONTENTION OF SURPLUS THAT IT WILL NOT PAY THE BALANCE OF THE CONTRACT PRICE OR REMOVE THE MATERIALS UNLESS AND UNTIL THE GOVERNMENT DELIVERS THE EXACT MATERIAL IT OFFERED FOR SALE. ALSO, IT HAS DEMANDED A REFUND OF THE BID DEPOSIT.

IN YOUR LETTER YOU EXPRESS SOME DOUBT AS TO WHETHER THE CONTRACTING OFFICER HAD PROPERLY DEFINED THE MATERIAL OFFERED FOR SALE, AS FOLLOWS:

ASIDE FROM THE PARAGRAPH OF THE SPECIAL SALES TERMS AND CONDITIONS ON INSPECTION, FOR GENERAL INFORMATION, IT MIGHT BE NOTED THAT THE " IRON AGE MAGAZINE," KNOWN AS THE NATIONAL METAL WORKING WEEKLY (FOR EXAMPLE IN THE ISSUE DATED FEBRUARY 2, 1961), LISTS PRICES OF NONFERROUS SCRAP METAL AS FOLLOWS:

CHART

LEAD

SOFT SCRAP LEAD ----------------------------------- 7 1/2 CENTS

BATTERY PLATES (DRY) ------------------------------- 3 1/4 CENTS

BATTERY PLATES ACID FREE ------------------------- 2 1/4 CENTS

FURTHERMORE, THE OFFICE OF MINERALS MOBILIZATION OF THIS DEPARTMENT ADVISES THAT THE TERMS ,SCRAP LEAD" AND "BATTERY PLATE LEAD" HAVE ENTIRELY DIFFERENT MEANINGS IN THE TRADE, THE FORMER HAVING A HIGHER MARKET VALUE THAN THE LATTER. * * *

THE INVITATION FOR BIDS CONTAINED AS A PART OF GENERAL SALE TERMS AND CONDITIONS THE FOLLOWING CONDITIONS AND PROVISIONS:

1. TELEGRAM 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 OBLIGATED TO FURNISH ANY LABOR FOR SUCH PURPOSE. IN 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. IT IS PROVIDED HEREIN THAT THE GOVERNMENT SHALL LOAD, THEN "WHERE IS" MEANS, F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION. 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.

4. BID GUARANTEE. THE BIDDER AGREES THAT (1) THE BID WILL NOT BE WITHDRAWN WITHIN THE TIME SPECIFIED FOR ACCEPTANCE AFTER THE OPENING OF BIDS (60 CALENDAR DAYS IF NO PERIOD BE SPECIFIED BY THE BIDDER), AND WILL DURING THAT TIME REMAIN FIRM AND IRREVOCABLE, AND THAT (2) THE BIDDER WILL PAY TO THE GOVERNMENT THE PURCHASE PRICE OF THE PROPERTY IN ACCORDANCE WITH THE BID IF ACCEPTED. IF A BID DEPOSIT IS REQUIRED, THE BID MUST BE ACCOMPANIED BY SAID BID DEPOSIT. 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 BE LESS THAN THE FORMER. DEPOSITS ACCOMPANYING BIDS WHICH ARE NOT ACCEPTED WILL BE RETURNED. DEPOSITS OF SUCCESSFUL BIDDERS MAY BE APPLIED AGAINST THE CONTRACT PRICE, AND UPON COMPLETION OF THE CONTRACT, ANY EXCESS OF THE DEPOSIT WILL BE RETURNED TO THE BIDDER.

5.PAYMENT. PAYMENT OF THE BALANCE OF THE PURCHASE PRICE, IF A DEPOSIT HAS BEEN MADE, OR OTHERWISE OF THE FULL PURCHASE PRICE, SHALL BE MADE BY CASH, OR BY CERTIFIED CHECK, CASHIER'S CHECK, BANK DRAFT, POSTAL OR EXPRESS MONEY ORDER, PAYABLE TO THE TREASURER OF THE UNITED STATES. UNLESS OTHERWISE SPECIFIED BY THE GOVERNMENT, PAYMENT OF THE FULL PURCHASE PRICE, SUBJECT TO ANY ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT PURSUANT TO CONDITION NO. 8, MUST BE MADE PRIOR TO THE DATE SPECIFIED FOR REMOVAL AND PRIOR TO DELIVERY OF ANY PROPERTY. IF ANY SUCH ADJUSTMENT IS NECESSARY, THEN PAYMENT MUST BE COMPLETED, UNLESS OTHERWISE SPECIFIED BY THE GOVERNMENT, IMMEDIATELY SUBSEQUENT TO ADJUSTMENT. IF THE SUCCESSFUL BIDDER FAILS TO MAKE FULL AND FINAL PAYMENT AS HEREIN PROVIDED, THE GOVERNMENT RESERVES THE RIGHT, UPON WRITTEN NOTICE TO THE SUCCESSFUL BIDDER, TO SELL OR OTHERWISE DISPOSE OF ANY OR ALL OF SUCH PROPERTY IN THE GOVERNMENT'S POSSESSION AND TO CHARGE THE LOSS, IF ANY, TO THE ACCOUNT OF THE DEFAULTING BIDDER. THE ORIGINAL PURCHASER WILL IN NO WAY BE RELEASED FROM FULL COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE SALE BY HIS RESALE OF THE PROPERTY.

IT WILL BE NOTED FROM THE TERMS OF SALE, WHICH ARE THOSE GENERALLY USED BY THE GOVERNMENT IN SELLING SURPLUS PROPERTY, THAT THE MATTER HERE IS NOT AN ORDINARY CONTRACT FOR THE PURCHASE AND SALE OF A VALUABLE COMMODITY. IN A RECENT CASE INVOLVING SALE OF GOVERNMENT SURPLUS PROPERTY AND MENTIONED IN YOUR LETTER, DADOURIAN EXPORT CORPORATION V. UNITED STATES, 291 F.2D 178, DECIDED BY THE U.S. COURT OF APPEALS FOR THE SECOND CIRCUIT ON JUNE 5, 1961, 8CCF PAR. 71488, THE COURT STATED THAT---

* * * WHEN THE GOVERNMENT SELLS SURPLUS GOODS IT IS TRYING TO DISPOSE OF A VAST MISCELLANY OF USED AND UNUSED PROPERTY IN AN EFFORT, SO FAR AS MAY UNDER THE CIRCUMSTANCES BE POSSIBLE, TO MINIMIZE ITS LOSS. SALES OF THIS CHARACTER ARE PROCESSED ON A MASS QUANTITY BASIS BY MEMBERS OF THE ARMED FORCES WHO SELDOM IF EVER HAVE ANY EXPERTISE IN THE PARTICULAR ITEMS WHICH COME TO THEIR WAREHOUSES AND DEPOTS. BUYERS OF SUCH SURPLUS PROPERTY KNOW PERFECTLY WELL THAT THERE IS ALWAYS THE CHANCE OF BUYING PROPERTY THAT MAY TURN OUT TO BE OF LITTLE VALUE, OR MAY DEVELOP INTO A GREAT BARGAIN WITH A HUGH WINDFALL OF PROFIT. ACCORDINGLY, THE GOVERNMENT VERY PROPERLY HAS PROTECTED ITSELF BY FORMULATING ITS CONTRACT FOR THE SALE OF SUCH SURPLUS PROPERTY SO AS TO SHIFT THE RISK FROM ITSELF TO THE BUYER. AS PROFESSOR CORBIN TELLS US, A PARTY TO A CONTRACT MAY AGREE TO ASSUME CERTAIN RISKS THAT IN THE ABSENCE OF AGREEMENT THE LAW WOULD NOT CAST UPON HIM. SEE 3 CORBIN CONTRACTS (1960), SECTION 598. SEE ALSO UNITED STATES V. HATHAWAY, 9 CIR., 1957, 242 F.2D 897. * * * THE INVITATION MADE IT ABUNDANTLY CLEAR THAT PROSPECTIVE PURCHASERS WERE NOT TO RELY ON THE COMPLETENESS AND ACCURACY OF THE DESCRIPTION OF THE PROPERTY OFFERED FOR SALE. BIDDERS WERE URGED, IN THE FIRST PARAGRAPH OF THE ABOVE-QUOTED CONDITIONS, TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS. THE PROPERTY OFFERED FOR SALE WAS SCRAP LEAD. THE DESCRIPTION MAY NOT CONFORM TO THE DESCRIPTION OF VARIOUS TYPES OF SCRAP LEAD AS SET OUT IN THE REFERRED-TO MAGAZINE, IRON AGE MAGAZINE, BUT THE MATERIAL IN QUESTION WAS NEVERTHELESS SCRAP LEAD. AS WAS STATED BY THE COURT IN UNITED STATES V. SILVERTON, 200 F.2D 824, AT PAGE 827, THE INVITATION WAS INTENDED TO SPARE THE GOVERNMENT THE NECESSITY OF ATTENDING TO THE NICETIES OF DETAIL IN DESCRIBING THE GOODS OFFERED FOR SALE, THAT IS, TO MAKE THE DESCRIPTION CONFORM TO ANY POSSIBLE TRADE USAGES OF WHICH THE SALVAGE OFFICERS MIGHT NOT EVEN BE AWARE.

IN VIEW OF THE FACTS REPORTED AND THE LAW APPLICABLE THERETO, WE CANNOT FIND ANY LEGAL BASIS FOR EXCUSING THE CONTRACTOR FOR ITS FAILURE TO PERFORM IN ACCORDANCE WITH ITS ACCEPTED BID, AND ITS REQUEST FOR REFUND OF THE BID DEPOSIT MUST BE DENIED.