B-147493, NOV. 15, 1961

B-147493, NOV. 15, 1961

TO DIESEL EQUIPMENT COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 18, 1961, REQUESTING RECONSIDERATION OF SETTLEMENT DATED SEPTEMBER 29, 1961, BY WHICH OUR CLAIMS DIVISION DISALLOWED YOUR CLAIM FOR AN ADJUSTMENT OF THE PURCHASE PRICE OF CERTAIN SURPLUS PROPERTY SOLD TO YOU BY THE DEPARTMENT OF THE NAVY UNDER CONTRACT NO. N63068S-50324, DATED MAY 24, 1961.

THE RECORD SHOWS CONSIDERABLE CORRESPONDENCE BETWEEN YOUR COMPANY AND THE NAVAL SUPPLY CENTER AT OAKLAND, CALIFORNIA, RELATING TO YOUR CLAIM, INCLUDING A LETTER DATED JUNE 28, 1961, IN WHICH YOU ADVISED THE NAVAL SUPPLY CENTER THAT THE PROPERTY DELIVERED TO YOUR COMPANY UNDER THE INDICATED CONTRACT WAS NOT AS DESCRIBED IN SALES INVITATION NO. B-184-61- 63068, AND YOU REQUESTED THAT AN ADJUSTMENT BE MADE IN THE PURCHASE PRICE AS INDICATED IN YOUR LETTER. UNDER DATE OF AUGUST 18, 1961, THE U.S. NAVY REGIONAL ACCOUNTS OFFICE FORWARDED YOUR CLAIM TO OUR CLAIMS DIVISION FOR DIRECT SETTLEMENT, THE SAME HAVING BEEN ADMINISTRATIVELY DENIED ON THE BASIS OF THE TERMS AND CONDITIONS OF THE CONTRACT INVOLVED. IN FORWARDING YOUR CLAIM TO OUR OFFICE THE DEPARTMENT OF THE NAVY REPORTED THAT YOUR COMPANY MADE NO INSPECTION OF THE PROPERTY PRIOR TO SUBMITTING YOUR BID.

BY SETTLEMENT OF SEPTEMBER 29, 1961, YOUR CLAIM WAS DISALLOWED GENERALLY ON THE GROUND THAT THE PROPERTY INVOLVED WAS OFFERED FOR SALE "AS IS" AND "WHERE IS," AND WITH A DISCLAIMER OF WARRANTY AS SET FORTH IN ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS, INCLUDING A DISCLAIMER AS TO THE DESCRIPTION OF THE PROPERTY. IT WAS STATED IN YOUR LETTER OF OCTOBER 18, 1961, THAT THE ,DESCRIPTION" OF THE PROPERTY IS NOT A MATTER OF OPINION, ETC., AND YOU APPEAR TO TAKE THE POSITION THAT, NOTWITHSTANDING THE CONTRACT PROVISIONS HEREINAFTER REFERRED TO, THE GOVERNMENT IS OBLIGATED TO DELIVER PROPERTY CONFORMING TO THE ADVERTISED "DESCRIPTION," OR TO MAKE AND ADJUSTMENT IN THE CONTRACT PRICE.

THE RECORD INDICATES THAT BY THE CITED SALES INVITATION THE NAVAL SUPPLY CENTER REQUESTED BIDS FOR THE SALE OF CERTAIN SURPLUS PROPERTY, INCLUDING ITEM 66, DESCRIBED AS FOLLOWS:

TABLE

"ENGINE FUEL SYSTEM PARTS, CONSISTING OF:

"3 EACH FUEL PUMP, TRANSFER. MFR. NATIONAL SUPPLY CO.,

P/N P-10372-A.

36 EACH FUEL INJECTOR. MFR. GENERAL MOTORS. P/N 5227326.

ACQUISITION COST. $3,013.20. CONDITION: UNUSED, GOOD.

EST. WT. 314 LBS. CUBE 9. IN BOXES AND CARTONS. PACKED FOR

SHIPMENT.

QUANTITY 39 EACH"

THE BIDS WERE OPENED ON MAY 19, 1961, AND IT WAS FOUND THAT YOUR COMPANY WAS THE HIGH BIDDER FOR ITEM 66 AT A UNIT PRICE OF $25.53, OR A TOTAL OF $995.67. PAYMENT IN FULL WAS RECEIVED ON MAY 29, 1961, AND DELIVERY OF THE PROPERTY WAS MADE TO PACIFIC INTERMOUNTAIN EXPRESS ON JUNE 1, 1961, PURSUANT TO YOUR INSTRUCTIONS.

BY VARIOUS PROVISIONS IN THE SALES INVITATION PROSPECTIVE BIDDERS WERE INVITED, URGED, AND CAUTIONED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS. ALSO, PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, WHICH BECAME A MATERIAL PART OF THE CONTRACT, PROVIDED, IN PART, AS FOLLOW:

"* * * ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS," * * *. THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION. HOWEVER, THE GOVERNMENT MAKES NO WARRANTY, EXPRESS 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. EXCEPT AS PROVIDED IN CONDITIONS NOS. 8 AND 10, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. THIS IS NOT A SALE BY SAMPLE.'

IN CONSTRUING LANGUAGE SIMILAR TO THAT QUOTED ABOVE IT HAS CONSISTENTLY BEEN HELD BY THE COURTS THAT SUCH A CONTRACT PROVISION CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY, AND THAT, WHILE ORDINARILY THERE IS AN IMPLIED WARRANTY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION, WHERE THERE EXISTS AN EXPRESS DISCLAIMER OF WARRANTY--- AS IN THE INSTANT CASE--- NO SUCH WARRANTY MAY BE IMPLIED FROM THE ADVERTISED DESCRIPTION OF THE PROPERTY SOLD. SEE W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; UNITED STATES V. KELLY, 112 F.SUPP. 831; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; I. SHAPIRO COMPANY V. UNITED STATES, 66 CT.CL. 424, 428; AND SILBERSTEIN AND SON V. UNITED STATES, 69 CT.CL. 412. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH A DISCLAIMER PROVISION AND IN THE ABSENCE OF BAD FAITH OR FRAUD, BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER. ALL RISKS AS TO THE FAILURE OF THE PROPERTY TO CORRESPOND TO THE DESCRIPTION ARE PLACED UPON THE PURCHASER.

RESPECTING YOUR FAILURE TO INSPECT THE PROPERTY IN THIS CASE, IT MAY BE SAID THAT IN NUMEROUS CASES THE COURTS HAVE CONSIDERED PROVISIONS FOR INSPECTION, SUCH AS ARE INVOLVED IN THE INSTANT CASE, AND IT HAS BEEN HELD GENERALLY THAT FAILURE TO INSPECT IS SUFFICIENT TO DENY A CLAIM BY A PURCHASER ON THE GROUND THAT THE MATERIAL OR PROPERTY DELIVERED DID NOT CONFORM TO THE ADVERTISED DESCRIPTION. IN THE CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, CT.CL. NO. 109 58, DECIDED APRIL 8, 1959, THERE WAS INVOLVED THE SALE OF A QUANTITY OF "STEEL, SCRAP, CAST STEEL," THE MATERIAL BEING SO REPRESENTED IN THE BID INVITATION. ARTICLE 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT THERE INVOLVED CONTAINED PROVISIONS FOR INSPECTION SIMILAR TO THOSE IN THIS CASE. IT SUBSEQUENTLY DEVELOPED THAT APPROXIMATELY FIFTY PERCENT OF THE MATERIAL WAS MALLEABLE IRON, AND THE PLAINTIFF SUED FOR THE DIFFERENCE BETWEEN WHAT IT PAID FOR THE MALLEABLE IRON AND ITS MARKET PRICE. AT THE TRIAL OF THE CASE IT WAS AGREED BY COUNSEL THAT STEEL AND MALLEABLE IRON ARE NOT DISTINGUISHABLE BY THE NAKED EYE, AND THAT THEY CAN BE DIFFERENTIATED ONLY BY MICROSCOPIC EXAMINATION OR CHEMICAL ANALYSIS. THE COURT FOUND THAT VISUAL INSPECTION WOULD HAVE BEEN INEFFECTUAL TO DETERMINE WHETHER THE MATERIAL WAS, IN FACT, AS DESCRIBED IN THE BID INVITATION, BUT NEVERTHELESS HELD THAT A BIDDER WHO BID WITHOUT MAKING WHATEVER INSPECTION WAS NECESSARY ASSUMED THE RISK ON THE GOODS NOT CONFORMING TO DESCRIPTION.

IT IS NOTED THAT IN YOUR LETTER OF JUNE 28, 1961, TO THE SALES OFFICE YOU REFERRED TO A DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS IN DOCKET NO. 6449, SEPTEMBER 7, 1960. AS MODIFIED UPON RECONSIDERATION BY DECISION DATED APRIL 26, 1961, THE DECISION IN THAT CASE APPEARS TO HAVE BEEN BASED UPON A FACTUAL DETERMINATION THAT THE DESCRIPTION WAS NOT BASED UPON THE BEST INFORMATION AVAILABLE. UNDER THE INTERPRETATION PLACED UPON THAT LANGUAGE BY THE COURT IN WESTERN NON-FERROUS METALS CORP. V. UNITED STATES, 192 F.SUPP. 774, WE FIND NOTHING IN THE PRESENT CASE TO JUSTIFY SUCH A FINDING.

FOR THE REASONS SET FORTH ABOVE WE CONCLUDE THAT THE ACTION TAKEN IN THE SETTLEMENT OF SEPTEMBER 29, 1961, DENYING YOUR CLAIM, WAS CORRECT, AND THE SAME IS HEREBY SUSTAINED.