B-148055, MAR. 8, 1962

B-148055: Mar 8, 1962

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER DATED JANUARY 22. ITEM 38 WAS DESCRIBED AS FOLLOWS: "COIL WINDING MACHINE. SLOAN WAS ACCEPTED AS TO ITEM 38 ON SEPTEMBER 22. SLOAN ADVISED THAT THE COIL WINDING MACHINE DELIVERED AS ITEM 38 WAS NOT EQUIPPED WITH A LOOP WINDER NO. 48193 AS DESCRIBED IN THE INVITATION AND HE REQUESTED THAT THE WAREHOUSE BE CHECKED FOR THE MISSING PART. THE CONTRACTING OFFICER STATES THAT AN INVESTIGATION REVEALED THAT THE DESCRIPTION IN THE SALES INVITATION WAS IN ERROR AND THAT THE MACHINE AS DISPLAYED FOR INSPECTION AND DELIVERED AS ITEM 38 DID NOT HAVE THE LOOP WINDING ATTACHMENT. IT WAS ALSO STATED THAT BY LETTER DATED NOVEMBER 13. SLOAN WAS ADVISED THAT IN VIEW OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT.

B-148055, MAR. 8, 1962

TO LIEUTENANT GENERAL ANDREW T. MCNAMARA, DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 22, 1962, WITH ENCLOSURES, FILE REFERENCE DLSC-UD, FROM THE CHIEF, PROPERTY UTILIZATION AND DISPOSAL DIVISION, REQUESTING A DECISION AS TO WHETHER THE RELIEF SOUGHT BY MR. FRANK W. SLOAN, SAN DIEGO, CALIFORNIA, UNDER CONTRACT NO. N63068S-52140 MAY BE GRANTED.

THE U.S. NAVY CONSOLIDATED SURPLUS SALES OFFICE, NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, BY INVITATION NO. B-42-62-63068 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF MISCELLANEOUS TOOLS AND SHIP EQUIPMENT. ITEM 38 WAS DESCRIBED AS FOLLOWS:

"COIL WINDING MACHINE, FLOOR MOUNTED. MFR. ELECTRIC SERVICE MFG.CO. PRODUCTIMETER MODEL 5H71 RAC NO. 36765. LOOP WINDER FOR DIAMOND COILS NO. 48193, LOOPS TO 40 INCHES IN LENGTH, YOM 1944. CENTURY ELECTRIC CO. MOTOR, SERIAL NO. NW32064, MODEL WC-4-9-6967, 6.2 AMPERES, 230 VOLTS DC, 1 1/2 HP. 1150 RPM. ACQUISITION: $600.00. USED--- IN FAIR CONDITION. EST.WT. 250 LBS. CU 12. LOOSE--- NOT PACKED FORSHIPMENT.

QUANTITY--- 1 EACH"

IN RESPONSE MR. FRANK W. SLOAN SUBMITTED A BID DATED SEPTEMBER 12, 1961, OFFERING TO PURCHASE ITEM 38 FOR THE LUMP SUM OF $165.80. THE BID OF MR. SLOAN WAS ACCEPTED AS TO ITEM 38 ON SEPTEMBER 22, 1961.

BY LETTER DATED OCTOBER 14, 1961, MR. SLOAN ADVISED THAT THE COIL WINDING MACHINE DELIVERED AS ITEM 38 WAS NOT EQUIPPED WITH A LOOP WINDER NO. 48193 AS DESCRIBED IN THE INVITATION AND HE REQUESTED THAT THE WAREHOUSE BE CHECKED FOR THE MISSING PART.

IN HIS REPORT OF JANUARY 5, 1962, THE CONTRACTING OFFICER STATES THAT AN INVESTIGATION REVEALED THAT THE DESCRIPTION IN THE SALES INVITATION WAS IN ERROR AND THAT THE MACHINE AS DISPLAYED FOR INSPECTION AND DELIVERED AS ITEM 38 DID NOT HAVE THE LOOP WINDING ATTACHMENT. IT WAS ALSO STATED THAT BY LETTER DATED NOVEMBER 13, 1961, MR. SLOAN WAS ADVISED THAT IN VIEW OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT, THE CONTRACTING OFFICER WAS WITHOUT AUTHORITY TO MAKE AN ADJUSTMENT IN THE CONTRACT PRICE OF THE COIL WINDING MACHINE COVERED BY ITEM 38.

IN A LETTER DATED DECEMBER 2, 1961, MR. SLOAN CONTENDED THAT SINCE THE INVITATION DESCRIBED THE COIL WINDING MACHINE AS BEING EQUIPPED WITH A LOOP WINDER, HE WAS ENTITLED TO EITHER THE MISSING PART OR AN ADJUSTMENT IN THE CONTRACT PRICE OF THE MACHINE. MR. SLOAN REQUESTED THAT HE BE REFUNDED THE SUM OF $61.93, WHICH, HE STATED, REPRESENTS THE ESTIMATED VALUE OF THE MISSING LOOP WINDER.

THE BID OF MR. SLOAN AND THE SALE WERE SUBJECT TO THE PROVISIONS OF THE GENERAL SALE TERMS AND CONDITIONS, PARAGRAPHS 1 AND 2, WHICH PROVIDE:

"1. INSPECTION. THE BIDDER IS INVITED, URGED, AND CAUTIONED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING A BID. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACES AND TIMES SPECIFIED IN THE INVITATION. IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING.

"2. CONDITION AND LOCATION OF PROPERTY. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, ALL PROPERTY LISTED THEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS.' IF IT IS PROVIDED THEREIN 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. 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 NO. 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.'

THE COURTS MANY TIMES HAVE CONSIDERED SUCH CONTRACT STIPULATIONS IN CASES INVOLVING THE SALE OF GOVERNMENT-OWNED SURPLUS GOODS, AND HAVE HELD CONSISTENTLY THAT SUCH PROVISIONS CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY. SEE W. E. HEDGER CO. V. UNITED STATES, 62 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151. THESE CASES AND OTHER CONCLUDE THAT UNDER SUCH PROVISIONS BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT, ANY WARRANTIES WHATEVER. IN THE CASE OF OVERSEAS NAVIGATION CORPORATION V. UNITED STATES, 131 CT.CL. 70, THE COURT OF CLAIMS HELD THAT THE TERMS OF THE SALES CONTRACT THERE UNDER CONSIDERATION, INCLUDING ITS "AS IS, WHERE IS" PROVISIONS, SPOKE FOR THEMSELVES AND THE PLAINTIFF WAS LEGALLY BOUND BY THEM.

THE EFFECT OF "THE BEST AVAILABLE INFORMATION" CLAUSE WAS CONSIDERED IN THE CASE OF WESTERN NON-FERROUS METALS CORP. V. UNITED STATES, 192 F.SUPP. 774. IN REGARD TO THE ABOVE CONTRACT CLAUSE THE COURT STATED AT PAGE 774 AS FOLLOWS:

" (1) THE CONTRACTUAL PROVISION UPON WHICH PLAINTIFF STAKES ITS CLAIM STATES THAT "THE DESCRIPTION IS BASED UPON THE BEST AVAILABLE INFORMATION.' WHEN READ IN THE CONTEXT OF THE UNEQUIVOCAL LANGUAGE IN WHICH IT IS SET, IT IS CLEAR THAT IT WOULD BE ERRONEOUS TO INTERPRET THE PROVISION AS OBLIGATING DEFENDANT TO MAKE ANY EFFORTS WHATEVER TO OBTAIN RELIABLE INFORMATION, OR TO INTERPRET IT AS A WARRANTY THAT THE INFORMATION SUPPLIED IS THE BEST INFORMATION THAT CAN BE OBTAINED. THE REASONABLE AND APPARENT INTERPRETATION IS THAT DEFENDANT REPRESENTS ONLY THAT IT POSSESSES NO INFORMATION BETTER THAN THAT WHICH IS OFFERED. GOOD FAITH IS ALL THAT IS REQUIRED. STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 10 CIR., 1957, 241 F.2D 677. AND PLAINTIFF HAS EXPRESSLY DISCLAIMED ANY INTENTION OF IMPUTING BAD FAITH TO DEFENDANT. IN SUMMARY, THERE IS NOTHING IN THE LANGUAGE OF THIS CONTRACT TO DISTINGUISH ITS MEANING FROM THAT OF SIMILAR LANGUAGE WHICH HAS BEEN DESCRIBED AS APPLYING THE RULE OF CAVEAT EMPTOR TO THE FURTHEST POSSIBLE LIMITS, AND UPON WHICH DEFENDANT HAS PREVAILED IN SITUATIONS SIMILAR TO THIS. * * *"

THERE IS NO EVIDENCE IN THE RECORD OF ANY BAD FAITH ON THE PART OF THE DISPOSAL OFFICER. IT DOES NOT APPEAR THAT THE DISPOSAL OFFICER KNEW THAT THE COIL WINDING MACHINE WAS NOT EQUIPPED WITH A LOOP WINDER. THE DESCRIPTION IN THE BID INVITATION FOR ITEM 38 WAS BASED ON THE "BEST AVAILABLE INFORMATION"--- AS STATED IN THE INVITATION--- HAVING BEEN TAKEN FROM THE DISPOSAL AGENCY RECORDS. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGATED TO ACT IN GOOD FAITH, AND THIS IT DID.

MOREOVER, MR. SLOAN MADE NO INSPECTION OF THE MACHINE INVOLVED PRIOR TO THE SUBMISSION OF HIS BID AS HE WAS URGED AND CAUTIONED TO DO. HAD HE DONE SO HE WOULD HAVE BEEN AWARE THAT THE MACHINE WAS NOT EQUIPPED WITH A LOOP WINDER. THE LAW IS CLEAR THAT WHERE SURPLUS MATERIALS ARE OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" AND "WHERE IS" BASIS, WITHOUT A WARRANTY OR GUARANTY OF ANY KIND, AS IN THE INSTANT SALE, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY OR THAT THEY ARE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING. SEE PAXTON MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463; AND KRUPP V. FEDERAL HOUSING ADMINISTRATION, 185 ID. 638.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR RELIEVING MR. FRANK W. SLOAN FROM HIS OBLIGATIONS UNDER CONTRACT NO. N63068S-52140.