B-169061, MAR. 20, 1970

B-169061: Mar 20, 1970

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BID ON WRONG ITEM UPON SUBMISSION OF EVIDENCE THAT SHOWED AUCTIONEER'S ASSISTANT POINTED TO ITEM 390 WHILE ITEM 389 WAS BEING SOLD. LEADING FOUR BIDDERS TO COMPETE FOR ITEM WHICH WAS NOT OFFERED FOR SALE. CONTRACT AWARDED HIGH BIDDER MAY BE RESCINDED AND BIDDER RELIEVED FROM LIABILITY SINCE MUTUAL CONSENT IS REQUISITE TO CREATION OF CONTRACT AND WHEN MUTUAL MISTAKE RENDERS BARGAIN INEQUITABLE. NO AGREEMENT IS MADE AND CONTRACT MAY BE RESCINDED UPON EQUITABLE GROUNDS. TO GENERAL HEDLUND: REFERENCE IS MADE TO A LETTER DATED FEBRUARY 11. THE AUCTION SALE WAS HELD ON AUGUST 19-20. THE SALE WAS DESIGNATED AS A "I-DAY. PARAGRAPH 23 OF THE INVITATION PROVIDES AS FOLLOWS: "AWARD OF ITEMS WILL BE MADE WHEN THE AUCTIONEER'S GAVEL FALLS DENOTING THE HIGH BIDDER AS TO ITEM OR GROUP OF ITEMS.

B-169061, MAR. 20, 1970

SALES--AUCTION--MISTAKES--BID ON WRONG ITEM UPON SUBMISSION OF EVIDENCE THAT SHOWED AUCTIONEER'S ASSISTANT POINTED TO ITEM 390 WHILE ITEM 389 WAS BEING SOLD, LEADING FOUR BIDDERS TO COMPETE FOR ITEM WHICH WAS NOT OFFERED FOR SALE, BOTH AUCTIONEER AND BIDDERS LABORING UNDER MUTUAL MISTAKE AS TO EXACT IDENTITY OF PROPERTY BEING OFFERED FOR SALE, CONTRACT AWARDED HIGH BIDDER MAY BE RESCINDED AND BIDDER RELIEVED FROM LIABILITY SINCE MUTUAL CONSENT IS REQUISITE TO CREATION OF CONTRACT AND WHEN MUTUAL MISTAKE RENDERS BARGAIN INEQUITABLE, NO AGREEMENT IS MADE AND CONTRACT MAY BE RESCINDED UPON EQUITABLE GROUNDS. SEE AMERICAN CASUALTY CO. OF READING, PA. V. MEMORIAL HOSPITAL ASSOCIATION, 223 F. SUPP. 539, 542, (1963).

TO GENERAL HEDLUND:

REFERENCE IS MADE TO A LETTER DATED FEBRUARY 11, 1970, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, DEFENSE SUPPLY AGENCY, HEADQUARTERS, CAMERON STATION, ALEXANDRIA, VIRGINIA, RECOMMENDING RESCISSION OF A CONTRACT AWARDED TO MR. RAYMOND BYE DURING AUCTION (INVITATION) SALE NO. 44-0018, ITEM 389.

THE AUCTION SALE WAS HELD ON AUGUST 19-20, 1969, AT TWO ARMY DEPOTS IN CALIFORNIA. THE SALE WAS DESIGNATED AS A "I-DAY, 2-SITE, WALK AROUND" AUCTION. PARAGRAPH 23 OF THE INVITATION PROVIDES AS FOLLOWS: "AWARD OF ITEMS WILL BE MADE WHEN THE AUCTIONEER'S GAVEL FALLS DENOTING THE HIGH BIDDER AS TO ITEM OR GROUP OF ITEMS. CONFIRMATION OF AWARD WILL BE FURNISHED THE PURCHASER, BY 25 AUGUST, 1969, BY THE DEFENSE SURPLUS SALES OFFICE, OAKLAND, CALIFORNIA * * *" MR. BYE REGISTERED AS A PROSPECTIVE BIDDER. ITEM 389 WAS "KNOCKED DOWN" TO MR. BYE AS THE HIGH BIDDER. HOWEVER, IMMEDIATELY AFTER THE "KNOCKDOWN", ANOTHER BIDDER ADVISED THE GOVERNMENT AUCTIONEER THAT MR. BYE HAD MADE AN ERROR, IN THAT HE HAD BEEN BIDDING ON ITEM 390, RATHER THAN ON ITEM 389. SUBSEQUENTLY, MR. BYE AND A THIRD BIDDER CONFIRMED THE ALLEGED MISTAKE, IN THAT THE BIDDERS HAD BID ON THE WRONG ITEM, CLAIMING THAT ONE OF THE TWO EMPLOYEES ASSISTING THE AUCTIONEER HAD INCORRECTLY POINTED HIS DIRECTIONAL SIGN TOWARDS ITEM 390. IT IS REPORTED THAT THE TAPE RECORDING OF THE SALE CLEARLY DISCLOSES THAT A "KNOCKDOWN" PRICE OF $1,250.00 WAS MADE TO MR. BYE. ON AUGUST 27, 1969, MR. BYE WAS MAILED A CONFIRMATION OF AWARD. A STATEMENT PREPARED BY MR. BYE, DATED JANUARY 2, 1970, AND SIGNED BY THREE OTHER BIDDERS STATED:

"THIS IS TO CERTIFY THAT DURING SALE 44-0018 A GOVERNMENT EMPLOYEE MADE A MISTAKE OF POINTING HIS ARROW AT ITEM 390 WHILE 389 WAS BEING SOLD, LEADING US TO BELIEVE ITEM 390 WAS BEING SOLD."

THE EVIDENCE SHOWS THAT ONE OF THE TWO ASSISTANTS OF THE AUCTIONEER CAUSED AT LEAST FOUR BIDDERS TO COMPETE ON AN AUCTION ITEM WHICH WAS NOT OFFERED FOR SALE BY THE ACUTIONEER. BOTH THE AUCTIONEER, ACTING ON BEHALF OF AND FOR THE CONTRACTING OFFICER, AND THE BIDDERS WERE LABORING UNDER A MUTUAL MISTAKE AS TO THE EXACT IDENTITY OF THE PROPERTY BEING OFFERED FOR SALE AS ITEM 389. SUCH BEING THE CASE, THERE IS FOR APPLICATION THE PRINCIPLE THAT A MUTUAL MISTAKE WITH RESPECT TO A FUNDAMENTAL PART OF THE BARGAIN WHICH RENDERS IT INEQUITABLE IF THE BARGAIN IS PERMITTED TO STAND IS A BASIS FOR RESCISSION UPON EQUITABLE GROUNDS. 2 WILLISTON ON SALES, SECTION 656. MOREOVER, AS HELD BY THE COURT IN AMERICAN CASUALTY CO. OF READING, PA. V. MEMORIAL HOSPITAL ASSOCIATION, 223 F. SUPP. 539, 542 (1963), MUTUAL CONSENT IS THE REQUISITE TO THE CREATION OF A CONTRACT, AND IF THERE IS A MISTAKE OF FACT BY THE PARTIES GOING TO THE ESSENCE OF A CONTRACT, NO AGREEMENT IS IN FACT MADE.

ACCORDINGLY, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO MR. BYE, AS ADMINISTRATIVELY RECOMMENDED. THE TAPE RECORDING OF THE SALE IS RETURNED.