B-164276, JUN. 24, 1968

B-164276: Jun 24, 1968

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TO TARASHINSKY MERCHANDISE COMPANY: REFERENCE IS MADE TO YOUR LETTER DATED MARCH 26. 48 AND 49 OF DEPARTMENT OF DEFENSE SEALED BID SALE NO. 11-7079 WERE AWARDED TO THE TARASHINSKY MERCHANDISE COMPANY ON FEBRUARY 3. EACH OF THE ITEMS WAS OFFERED ON A POUND BASIS. ITEM 37 WAS DESCRIBED AS FOLLOWS: "COTTON RAGS MIXED. WHICH ARE NOT INCLUDED IN THE TOTAL WEIGHT AND SALE AND REMAIN THE PROPERTY OF THE GOVERNMENT. DISTINCTIVE ARTICLES OF UNIFORM.' 408 POUNDS OF ITEM 37 WERE REMOVED ON FEBRUARY 17. THE REMAINDER CONSISTING OF 1260 POUNDS WAS REMOVED ON FEBRUARY 23. IT IS REPORTED THAT ON MARCH 8. HE WAS ADVISED THAT THERE WAS NO MORE MATERIAL AVAILABLE ON THIS ITEM. NO REQUEST FOR ADJUSTMENT IN PRICE OR RESCISSION OF THE SALE WAS TO BE CONSIDERED.

B-164276, JUN. 24, 1968

TO TARASHINSKY MERCHANDISE COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED MARCH 26, 1968 (RECEIVED HERE APRIL 25, 1968), IN EFFECT REQUESTING RECONSIDERATION OF GENERAL ACCOUNTING OFFICE CLAIMS DIVISION SETTLEMENT, DATED MARCH 22, 1968, WHICH DISALLOWED YOUR CLAIM CONCERNING ITEM 37, SEALED BID SALE NO. 11 7079, DEFENSE SURPLUS SALE OFFICE, PHILADELPHIA NAVAL SHIPYARD.

ITEMS 36, 37, 43, 48 AND 49 OF DEPARTMENT OF DEFENSE SEALED BID SALE NO. 11-7079 WERE AWARDED TO THE TARASHINSKY MERCHANDISE COMPANY ON FEBRUARY 3, 1967, UNDER CONTRACT NO. 11-7079-040. EACH OF THE ITEMS WAS OFFERED ON A POUND BASIS. ITEM 37 WAS DESCRIBED AS FOLLOWS: "COTTON RAGS MIXED, SCRAP: INCLUDES SOME WOOL AND NYLON, CONSISTING OF FIELD JACKET LINERS, MENS SHIRTS AND TROUSERS, BARRACK BAGS, SLIP COVERS, ATHLETIC SHORTS WITH METALLIC AND NONMETALLIC ATTACHMENTS, CONSISTING OF ZIPPERS, BUTTONS AND FASTENERS. PACKED IN PALLET CONTAINERS, WHICH ARE NOT INCLUDED IN THE TOTAL WEIGHT AND SALE AND REMAIN THE PROPERTY OF THE GOVERNMENT. INSIDE.

2,500 POUND SEE ARTICLE AL, DISTINCTIVE ARTICLES OF UNIFORM.' 408 POUNDS OF ITEM 37 WERE REMOVED ON FEBRUARY 17, 1967, AND THE REMAINDER CONSISTING OF 1260 POUNDS WAS REMOVED ON FEBRUARY 23, 1967, TOTALLING DELIVERY OF 1668 POUNDS OR 67 PERCENT OF THE CATALOGUED 2500 POUNDS.

IT IS REPORTED THAT ON MARCH 8, 1967, MR. TARASHINSKY CALLED FOR DELIVERY OF THE BALANCE OF MATERIAL ON ITEM 37, STATING THAT HE HAD NOT RECEIVED THE MINIMUM OF 75 PERCENT OF THE CATALOGUED WEIGHT -- 1875 POUNDS. HE WAS ADVISED THAT THERE WAS NO MORE MATERIAL AVAILABLE ON THIS ITEM. ON MARCH 17, 1968, MR. TARASHINSKY STATED THAT HE INTENDED TO PROCESS A CLAIM AGAINST THE GOVERNMENT FOR MATERIAL NOT RECEIVED ON ITEM 37 UNLESS A SATISFACTORY ADJUSTMENT COULD BE REACHED. HE SUGGESTED THAT THE SHORTAGE RECEIVED ON ITEM 37 BE DEDUCTED FROM THE OVERAGE RECEIVED ON ITEM 36. TARASHINSKY MERCHANDISE COMPANY PAID 10 CENTS PER POUND MORE FOR ITEM 36 THAN IT DID FOR ITEM 37. IT RECEIVED 207 POUNDS SHORT OF THE 75 PERCENT VARIATION QUANTITY ON ITEM 37.

IN THE ALTERNATIVE YOU REQUEST THAT YOU BE PERMITTED TO RETURN THE MATERIAL DELIVERED AS ITEM 37, AND THAT YOU BE REIMBURSED THE CONTRACT PRICE PLUS 2 CENTS PER POUND FOR FREIGHT CHARGES FROM THE HOLDING ACTIVITY, OR THAT YOU BE PERMITTED TO RETAIN THE QUANTITY RECEIVED AT AN ADJUSTED PRICE OF ONE CENT PER POUND.

THE GENERAL SALE TERMS AND CONDITIONS CONTAINED THE USUAL DISCLAIMER OF WARRANTY (CONDITION NO. 2) AS TO QUANTITY, KIND, CHARACTER, WEIGHT, ETC., OF THE PROPERTY FOR SALE AND EXCEPT AS PROVIDED IN CONDITIONS NOS. 8 AND 11, NO REQUEST FOR ADJUSTMENT IN PRICE OR RESCISSION OF THE SALE WAS TO BE CONSIDERED. CONDITIONS NOS. 8 (AS CHANGED BY ARTICLE AH OF SPECIAL SEALED BID CONDITIONS, DLSC FORM 437, JUNE 65) AND 11 PROVIDED AS FOLLOWS: "ARTICLE AH: ADJUSTMENT FOR VARIATION IN WEIGHT: CONDITION NO. 8 OF THE GENERAL SALE TERMS AND CONDITIONS ENTITLES ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT- (STANDARD FORM 114-C) IS HEREBY DELETED AS PERTAINS TO ITEMS OFFERED BY WEIGHT. WHEN PROPERTY IS SOLD ON A WEIGHT BASIS THE GOVERNMENT RESERVES THE RIGHT TO VARY THE WEIGHT DELIVERED BY 25 PERCENT FROM THE WEIGHT LISTED IN THE INVITATION, AND THE PURCHASER AGREES TO ACCEPT DELIVERY OF ANY WEIGHT WITHIN THESE LIMITS. THE PURCHASE PRICE WILL BE ADJUSTED UPWARDS OR DOWNWARDS IN ACCORDANCE WITH THE UNIT PRICE ON THE BASIS OF THE WEIGHT ACTUALLY DELIVERED. ,LIMITATION ON GOVERNMENT'S LIABILITY. EXCEPT FOR TRANSPORTATION CHARGES WHEN A RETURN OF PROPERTY AT GOVERNMENT COST IS AUTHORIZED BY THE GOVERNMENT, THE MEASURE OF THE GOVERNMENT'S LIABILITY IN ANY CASE WHERE LIABILITY OF THE GOVERNMENT TO THE PURCHASER HAS BEEN ESTABLISHED SHALL NOT EXCEED REFUND OF SUCH PORTION OF THE PURCHASE PRICE AS THE GOVERNMENT MAY HAVE CEIVED.'

IN ADDITION, PARAGRAPH (2) OF SPECIAL CONDITIONS, GUARANTEED DESCRIPTIONS, DLSC FORM 575, APR 66 (ALL SALES) PROVIDED AS FOLLOWS:

"/2) ESTIMATES AS TO -WEIGHT- OF PROPERTY OFFERED FOR SALE BY THE UNIT- ARE NOT GUARANTEED. * * *"

THE MATTER HERE INVOLVED DOES NOT APPEAR TO BE ONE IN WHICH THE GOVERNMENT FAILED TO DELIVER ALL OF THE ITEM OFFERED FOR SALE. RATHER IT APPEARS THAT THE ESTIMATE OF THE QUANTITY IN THE ITEM OF SCRAP COTTON RAGS WAS ERRONEOUS. IT HAS CONSISTENTLY BEEN HELD BY THE COURTS AND OUR OFFICE THAT, IN THE ABSENCE OF BAD FAITH, ANY EXPRESS DISCLAIMER OF WARRANTY VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALE TRANSACTION. SEE LUMBRAZO V WOODRUFF, 175 N.E. 525; W.E. HEDGER COMPANY V UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; AND I. SHAPIRO AND COMPANY V UNITED STATES, 66 CT. CL. 424. THE DISCLAIMER OF WARRANTY IN CONDITION NO. 2 APPLIED TO QUANTITY AND WEIGHT OF THE PROPERTY OFFERED FOR SALE. THE PROVISIONS OF CONDITIONS NOS. AH AND 11 MUST BE REGARDED AS MODIFYING THE GENERAL DISCLAIMER OF WARRANTY IN CONDITION NO. 2. IN OTHER WORDS, UNDER CONDITION NO. AH YOU WERE NOT BOUND TO ACCEPT PROPERTY OFFERED FOR SALE ON A "UNIT PRICE" BASIS WHERE THE QUANTITY OR WEIGHT VARIATION WAS MORE THAN 25 PERCENT BEYOND OR BELOW THAT LISTED IN THE INVITATION.

IT WAS YOUR RIGHT UNDER THE CONTRACT TO NOTIFY THE GOVERNMENT THAT YOU WOULD NOT ACCEPT THE PROPERTY IN QUESTION WHEN THE VARIATION IN WEIGHT WAS MORE THAN 25 PERCENT OF THE ADVERTISED WEIGHT. SINCE THE ESTIMATED WEIGHT OF THE SCRAP RAGS WAS STATED AS 2500 POUNDS AND SINCE A VARIATION IN POUNDAGE MUST NECESSARILY HAVE BEEN ANTICIPATED BY BOTH PARTIES TO THE CONTRACT, IT WAS INCUMBENT UPON YOU TO DETERMINE THE POUNDAGE AT OR ABOUT THE TIME OF DELIVERY OF THE ITEM TO YOU. WE NOTE FROM THE FILE BEFORE US THAT IN YOUR LETTER OF MARCH 17, 1967, TO THE SALES CONTRACTING OFFICER YOU STATED THAT YOU WISHED TO INVOKE THE GUARANTEED DESCRIPTION CLAUSE ON LOT 37 SINCE THE LOT DELIVERED CONSISTED OF LESS THAN 75 PERCENT OF THE QUANTITY OFFERED. HOWEVER, YOU DID NOT REFUSE DELIVERY BUT INDICATED A DESIRE TO NEGOTIATE THE MATTER, OFFERING THE ALTERNATIVE TO KEEP THE QUANTITY DELIVERED, AT A REDUCED PRICE, OR RETURN THE ITEM TO THE NEAREST GOVERNMENT INSTALLATION. AGAIN, IN YOUR LETTER DATED JUNE 29, 1967, TO OUR CLAIMS DIVISION, YOU STATED THAT YOU REQUESTED ADDITIONAL QUANTITIES OF ITEM37 MERCHANDISE TO COMPLETE THE CATALOG LISTED QUANTITY OF 2500 POUNDS, AND ALSO REPEATED YOUR DEMAND THAT, IN THE ALTERNATIVE, YOU BE PERMITTED TO RETURN THE MERCHANDISE, OR THAT YOU BE PERMITTED TO RETAIN THE MERCHANDISE AT A PRICE OF 2-1/2 CENTS PER POUND INSTEAD OF THE BID PRICE OF 5.39 CENTS PER POUND.

CONTRARY TO YOUR BELIEF THE CONTRACT SPECIFICALLY PROVIDES, AS QUOTED ABOVE, THAT ESTIMATES AS TO WEIGHT OF PROPERTY OFFERED FOR SALE BY THE UNIT ARE NOT GUARANTEED. BUT FOR THE PROVISION RELATING TO VARIANCE IN QUANTITY, YOU WOULD HAVE BEEN REQUIRED TO ACCEPT DELIVERY OF THE ACTUAL QUANTITY ON HAND AT TIME OF BID OPENING. HOWEVER, THE REMEDY AFFORDED THE PURCHASER UNDER THE CONDITION FOR VARIATION IN QUANTITY OR WEIGHT MUST BE REGARDED AS DETERMINING THE RIGHTS OF THE PARTIES TO THE CONTRACT. THIS CONDITION, IN VIEW OF THE VARIATION IN QUANTITY IN EXCESS OF 25 PERCENT, AFFORDED YOU ONLY TWO ALTERNATIVES: ONE, TO ACCEPT, OR TWO, TO REJECT DELIVERY OF THE 1668 POUNDS OF RAGS. SINCE YOU DID NOT REJECT OUTRIGHT THE QUANTITY OF MERCHANDISE ACTUALLY TENDERED, BUT ACCEPTED DELIVERY OF THE LESSER QUANTITY AND ENTERED INTO A SERIES OF OFFERS FOR PRICE ADJUSTMENT, WE MUST CONCLUDE THAT YOU WAIVED YOUR RIGHT UNDER CONDITION NO. AH TO REJECT THE SHIPMENT BECAUSE OF VARIATION IN QUANTITY OR WEIGHT. IN ADDED SUPPORT OF THE CONCLUSION THAT YOU HAVE WAIVED THE RIGHT TO RETURN THE MERCHANDISE RECEIVED, WE NOTE IN YOUR LETTER OF MAY 4, 1967, TO THE SALES CONTRACTING OFFICER THAT YOU HAD ON HAND AT THAT TIME ONLY 1500 OF THE ORIGINAL 1668 POUNDS DELIVERED.

ACCORDINGLY, UPON REVIEW, THE SETTLEMENT OF MARCH 22, 1968, IS SUSTAINED.