B-153291, FEB. 5, 1964

B-153291, FEB. 5, 1964

TO CONTINENTAL METAL COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 10, 1964, REQUESTING REVIEW OF OUR SETTLEMENT DATED DECEMBER 31, 1963, DISALLOWING YOUR CLAIM FOR A REDUCTION IN PRICE ON A QUANTITY OF ALUMINUM SCRAP PURCHASED FROM THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA NAVAL BASE, PENNSYLVANIA, PURSUANT TO CONTRACT NO. DSA-11-S-2173, DATED JULY 23, 1963.

IN RESPONSE TO SALES INVITATION NO. 11-S-64-2 ISSUED JUNE 26, 1963, BY DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA, YOU SUBMITTED A BID DATED JULY 15, 1963, ACCOMPANIED BY THE REQUIRED BID DEPOSIT IN THE FORM OF A CERTIFIED CHECK FOR $1,403.20 OFFERING TO PURCHASE ITEM 22 COVERING SCRAP ALUMINUM AND DURALUMIN SOLIDS FOR $7,016. AMONG OTHER DESCRIPTIVE DETAILS SET FORTH FOR ITEM NO. 22 WAS THAT IT CONSISTED OF SMASHED BOMBSIGHTS AND GYROS AND WAS CONTAMINATED WITH FOREIGN ATTACHMENTS. YOUR BID WHICH WAS THE HIGHEST BID RECEIVED WAS ACCEPTED BY THE GOVERNMENT CONTRACTING OFFICER ON JULY 23, 1963. BY LETTER DATED JULY 26, 1963, YOU INDICATED DISSATISFACTION WITH THE ITEM NOT BEING WHAT WAS EXPECTED, ALLEGING THAT A GOVERNMENT EMPLOYEE HAD INFORMED YOU PRIOR TO SUBMISSION OF YOUR BID, THAT THE ITEM CONTAINED A MINIMUM OF 90 PERCENT ALUMINUM, WHEN IN FACT IT WAS LATER LEARNED UPON PHYSICAL INSPECTION OF THE PROPERTY BY YOUR AFTER AWARD THAT THE PERCENTAGE OF ALUMINUM CONTENT WAS NEARER 40 PERCENT AND AFTER FURTHER CORRESPONDENCE A REVISION OF THE CONTRACT PRICE TO $0.035 WAS REQUESTED BY YOU. THE ADMINISTRATIVE OFFICE HAS REPORTED THAT YOU HAVE NOT PAID THE BALANCE OF THE CONTRACT PRICE OF $5,612.80, NOR HAVE YOU REMOVED THE PURCHASED PROPERTY. FURTHER, THE DEPOT ACTIVITY HAS REPORTED TO THE CONTRACTING OFFICE THAT MR. PAUP, CHIEF, SCRAP AND SALVAGE BRANCH OF THAT ACTIVITY, RECEIVED A TELEPHONE CALL (APPROXIMATELY JULY 9, 1963) FROM YOU REQUESTING INFORMATION AS TO PERCENTAGE OF ALUMINUM VERSUS STEEL IN ITEM 22. MR. PAUP SAID HE DID NOT DISASSEMBLE ANY OF THE UNITS AND COULD NOT VERIFY THE CORRECT PERCENTAGE. HE REPORTED THAT YOU THEN ASKED FOR HIS OPINION OF THE APPROXIMATE PERCENTAGE OF ALUMINUM VERSUS STEEL AND THAT HE THEN SAID THAT FROM THE APPEARANCE OF THE ITEM THE LOT MIGHT BE 80 TO 90 PERCENT ALUMINUM. THIS OPINION WAS BASED ON THE EXAMINATION OF ONE COMPONENT OF THE ENTIRE LOT. BY LETTER OF AUGUST 23, 1963, THE SALES CONTRACTING OFFICER NOTIFIED YOU THAT THE ALLEGED MISDESCRIPTION HAD BEEN INVESTIGATED AND YOU WERE ADVISED THAT THE INFORMATION GIVEN YOU BY MR. PAUP WAS BASED ON THE EXAMINATION OF ONLY ONE COMPONENT OF THE ENTIRE LOT AND DID NOT CONSTITUTE AN ESTIMATE OF ALUMINUM CONTENT OF THE ENTIRE LOT. YOUR ATTENTION WAS INVITED TO ARTICLE NO. 1,"INSPECTION; " NO. 2, "CONDITION AND LOCATION OF PROPERTY" AND TO ARTICLE NO. 12,"ORAL STATEMENTS AND MODIFICATIONS" OF THE GENERAL SALE TERMS AND CONDITIONS OF THE SALES INVITATION. YOUR CLAIM TO THIS OFFICE FOLLOWED AND WAS DISALLOWED FOR THE STATED REASON THAT ARTICLE 12 PROVIDED THAT ANY ORAL STATEMENT MADE BY ANY REPRESENTATIVE OF THE GOVERNMENT CHANGING OR SUPPLEMENTING THE CONTRACT OR ANY CONDITION THEREOF, IS UNAUTHORIZED AND SHALL CONFER NO RIGHT UPON THE PURCHASER. THE DISALLOWANCE STATED FURTHER THAT WHEN GOODS ARE SOLD TO BIDDERS THERE IS CONSUMMATED A CONTRACT OF SALE THEREFOR EMBODYING ALL THE TERMS AND CONDITIONS OF THE SALE, AND WHERE AS IN THIS CASE, THE PROPERTY IS SOLD ON AN "AS IS" AND "WHERE IS" BASIS, WITHOUT WARRANTY OR GUARANTY--- IN THE ABSENCE OF BAD FAITH, FRAUD OR MISREPRESENTATION--- THE TRANSACTION IS CLOSED WHEN THE GOODS ARE SO SOLD; THAT IN SUCH CASES A REVISION OF THE SALE OR REFUND OF THE PURCHASE PRICE OR ANY PART THEREOF IS NOT AUTHORIZED AND THAT THE COMMON LAW RULE OF CAVEAT EMPTOR APPLIES THERETO. IN YOUR REQUEST FOR RECONSIDERATION YOU STATE, AMONG OTHER THINGS, YOUR OPINION THAT THE INFORMATION THE CHIEF OF THE SCRAP AND SALVAGE BRANCH GAVE YOU DID NOT VIOLATE ARTICLE 12 "FOR HE DID NOT IMPLY NOR INTEND TO ALTER, OR CHANGE, ANY CONDITIONS OR TERMS OF THE CONTRACT.' APPARENTLY IT IS YOUR CONTENTION THAT THIS LACK OF INTENT ON HIS PART VITIATES THE TERMS OF ARTICLE 12 AND THEREFORE CONFERS A RIGHT UPON YOU AS PURCHASER IN CONTRADISTINCTION TO THE EXPRESS TERMS OF THE ARTICLE.

AS PREVIOUSLY STATED, ARTICLE 12 OF THE GENERAL SALE TERMS AND CONDITIONS PROVIDES THAT ANY ORAL STATEMENT OR REPRESENTATION BY ANY REPRESENTATIVE OF THE GOVERNMENT, CHANGING OR SUPPLEMENTING THIS CONTRACT OR ANY CONDITION THEREOF, IS UNAUTHORIZED AND SHALL CONFER NO RIGHT UPON THE PURCHASER.

BOTH YOUR INITIAL CLAIM AND YOUR REQUEST FOR RECONSIDERATION SET FORTH THE ALLEGATION THAT YOUR BID WAS BASED UPON MR. PAUP'S DESCRIPTION OF THE MATERIAL. SINCE THE SALES INVITATION DOES NOT CONTAIN ANY DESCRIPTION OF THE ALUMINUM CONTENT OF THE PURCHASED MATERIAL, YOU THEREFOR PATENTLY CONSIDER THAT MR. PAUP'S OPINION DID SUPPLEMENT THE CONTRACT IN SPITE OF YOUR CONTENTION THAT ARTICLE 12 IS NOT INVOLVED. SUCH A CLAUSE WAS HELD IN THE CASE OF STAR WOOLEN COMPANY V. UNITED STATES, 309 F.2D 409, TO BE EFFECTIVE IN RELIEVING THE GOVERNMENT FROM LIABILITY FOR UNAUTHORIZED ORAL STATEMENTS MADE BY EMPLOYEES.

ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION, WHICH WAS INCORPORATED AS A PART OF CONTRACT NO. DSA-11-S 2173, EXPRESSLY SETS FORTH THE DETAILED CONDITIONS OF THE DISCLAIMER OF WARRANTY CLAUSE AND YOU FULLY AGREED TO THE WRITTEN TERMS THEREOF. THUS THE ORAL STATEMENTS, SUCH AS THOSE MADE BY MR. PAUP TO YOU, MAY BE CONSIDERED TO HAVE BEEN MERE EXPRESSIONS OF OPINION ONLY, GIVEN AT YOUR REQUEST, AS TO THE TYPE OF MATERIAL HE THOUGHT WAS BEING SOLD. WE CAN PERCEIVE OF NO LEGAL BASIS FOR ATTACHING ANY MORE LIABILITY TO AN HONEST ERRONEOUS ORAL DESCRIPTION OF ANY OF THE PROPERTY BEING OFFERED FOR SALE UNDER THESE CONDITIONS THAN TO AN ERRONEOUS WRITTEN DESCRIPTION OF THE PROPERTY WHICH IS COMPLETED COVERED BY THE DISCLAIMER OF WARRANTY CLAUSE. TO PERMIT MORE EMPHASIS TO BE PLACED UPON AN ORAL DESCRIPTION OF THIS KIND THAN ON THE WRITTEN DESCRIPTION WOULD, OF COURSE, IN MANY CASES, DEFEAT THE VERY PURPOSE OF THE EXPRESS DISCLAIMER OF WARRANTY PROVISION AND, IN FACT, WOULD ALSO BE TANTAMOUNT TO THE ACCEPTANCE OF ORAL TESTIMONY OR EVIDENCE TO VARY OR ABROGATE THE TERMS OF A WRITTEN INSTRUMENT. FURTHER, IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT, IN THE ABSENCE OF BAD FAITH, SUCH AN EXPRESS DISCLAIMER OF WARRANTY AS THAT SET FORTH IN THE CONTRACT, REFERRED TO IN OUR SETTLEMENT OF DECEMBER 31, 1963, WHICH SPECIFICALLY REFERS TO, AMONG OTHERS, THE KIND AND CHARACTER OF THE PROPERTY BEING OFFERED FOR SALE, VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER CO. 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 CO. V. UNITED STATES, 66 CT.CL. 424. THERE IS NOTHING IN THE RECORD BEFORE US TO INDICATE BAD FAITH ON THE PART OF THE SALES CONTRACTING OFFICER OR ANY REPRESENTATIVE OF THE GOVERNMENT IN CONNECTION WITH THE TRANSACTION.