B-176497, AUG 10, 1972

B-176497, AUG 10, 1972

SALE CONTRACT - VARIANCE IN WEIGHT - RELIEF AFFORDED DECISION AFFIRMING A SETTLEMENT WHICH DISALLOWED A CLAIM OF PACIFIC TRADING CORPORATION FOR $459.42, ALLEGED TO BE DUE FOR FREIGHT CHARGES PAID AS THE RESULT OF THE GOVERNMENT'S FAILURE TO ACCURATELY DESCRIBE THE QUANTITY OF ELECTRONIC SCRAP COVERED ON A SALES CONTRACT AWARDED BY THE DEFENSE SURPLUS SALES OFFICE, COLUMBUS, OHIO. SINCE CLAIMANT KNEW AT THE TIME HE ACCEPTED THE SHIPMENT THAT THE WEIGHT VARIANCE WAS IN EXCESS OF THE 25 PERCENT ALLOWED UNDER CONDITION 12 OF THE CONTRACT, HE WAIVED HIS RIGHT TO REJECT THE SHIPMENT. THERE IS NO AUTHORITY UNDER THE CONTRACT TO ALLOW CLAIMANT ANY RELIEF BEYOND THAT HERETOFORE AFFORDED HIM.

TO PACIFIC TRADING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 15, 1972, IN WHICH YOU REQUEST REVIEW OF OUR SETTLEMENT OF JUNE 13, 1972 (OUR CLAIM NO. Z 1901407(1)). THE SETTLEMENT DISALLOWED YOUR CLAIM FOR $459.42, ALLEGED TO BE DUE FOR FREIGHT CHARGES PAID BY YOU AS THE RESULT OF THE GOVERNMENT'S FAILURE TO ACCURATELY DESCRIBE THE QUANTITY OF ELECTRONIC SCRAP OFFERED BY THE DEFENSE SURPLUS SALES OFFICE, COLUMBUS, OHIO, UNDER ITEM 51 OF INVITATION FOR BIDS 27-1044.

ITEM 51 OF THAT INVITATION OFFERED FOR SALE 63,568 POUNDS OF ELECTRONIC SCRAP. THE INVITATION INCORPORATED THE GENERAL INSTRUCTIONS, TERMS AND CONDITIONS SET FORTH IN A DLSC PAMPHLET ENTITLED "SALE BY REFERENCE," DATED MARCH 1969. PART 2 OF THAT PAMPHLET, UNDER THE HEADING "SALE OF GOVERNMENT PROPERTY - GENERAL SALE TERMS AND CONDITIONS," PROVIDES IN PART AS FOLLOWS:

1. INSPECTION. THE BIDDER IS INVITED, URGED, AND CAUTIONED TO INSPECT THE PROPERTY PRIOR TO SUBMITTING A BID. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACE AND TIMES SPECIFIED IN THE INVITATION.

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." THE DESCRIPTION OF THE PROPERTY IS BASED ON THE BEST INFORMATION AVAILABLE TO THE SALES OFFICE. HOWEVER, UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, 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 AND EXCEPT AS PROVIDED IN CONDITIONS NO. 12 AND 14 OR OTHER SPECIAL CONDITIONS OF THE INVITATION, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. THIS IS NOT A SALE BY SAMPLE.

12. ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT. EXCEPT FOR TERM CONTRACTS, WHEN PROPERTY IS SOLD BY A UNIT OTHER THAN "WEIGHT," THE GOVERNMENT RESERVES THE RIGHT TO VARY THE QUANTITY TENDERED OR DELIVERED TO THE PURCHASER BY 10%; WHEN THE PROPERTY IS SOLD BY "WEIGHT," THE GOVERNMENT RESERVES THE RIGHT TO VARY THE WEIGHT TENDERED OR DELIVERED TO THE PURCHASER BY 25%. THE PURCHASE PRICE WILL BE ADJUSTED UPWARDS OR DOWNWARDS IN ACCORDANCE WITH THE UNIT PRICE AND ON THE BASIS OF THE QUANTITY OR WEIGHT ACTUALLY DELIVERED. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, NO ADJUSTMENT FOR SUCH VARIATION WILL BE MADE WHERE PROPERTY IS SOLD ON A "PRICE FOR THE LOT" BASIS.

15. LIMITATION ON GOVERNMENT'S LIABILITY. EXCEPT FOR REASONABLE PACKING, LOADING, AND TRANSPORTATION COSTS, WHEN A RETURN OF PROPERTY AT GOVERNMENT COST IS AUTHORIZED, 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 RECEIVED.

THE RECORD HERE SHOWS RECEIPT OF YOUR BID ON SEPTEMBER 23, 1970, AND BY NOTICE OF AWARD DATED SEPTEMBER 29, 1970, YOU WERE AWARDED CONTRACT NO. 27 -1044-50 BASED ON YOUR BID OF $0.016999 PER POUND FOR THE 63,568 POUNDS OF ELECTRONIC SCRAP UNDER ITEM 51. THE RECORD FURTHER SHOWS THAT YOUR AGENT, UNION COMPRESSED STEEL COMPANY, AT THE TIME OF LOADING AT DULUTH INTERNATIONAL AIRPORT ON OCTOBER 30, 1970, REALIZED THAT THERE WAS A LARGE DISCREPANCY BETWEEN THE ADVERTISED QUANTITY AND THE ACTUAL WEIGHT RECEIVED. CONTRARY TO THE ASSERTION IN YOUR LETTER THAT THE SHORTAGE WAS NOT DISCOVERED UNTIL THE LOADING WAS COMPLETED AND THE CAR WEIGHED ON THE RAILROAD SCALE, OUR RECORD SHOWS THAT MRS. M. A. SEITZ, SALES CONTRACTING OFFICER, TELEPHONED MR. WILLIAM MCKNIGHT IN CALIFORNIA, AND PRIOR TO THE TIME THAT THE CAR WAS WEIGHED ON THE RAILROAD SCALE, ADVISED HIM THAT A SHORTAGE EXISTED AND THAT THE QUANTITY DELIVERED APPROXIMATED ONLY 34,440 POUNDS; MR. MCKNIGHT TOLD MRS. SEITZ TO RELEASE THE PROPERTY.

YOUR CLAIM REPRESENTS THE DIFFERENCE BETWEEN THE $904.25 PAID FOR THE RAIL TRANSPORTATION FROM DULUTH, MINNESOTA, TO LYNWOOD, CALIFORNIA, BASED ON A 50,00-POUND MINIMUM WEIGHT, AND AN AMOUNT BASED ON THE RAILROAD SCALE WEIGHT OF 29,420 POUNDS AT A RATE OF $30.24 PER NET TON. WE NOTE THAT UNDER CONDITION 12 OF THE SALES AGREEMENT, THE GOVERNMENT RESERVED THE RIGHT TO VARY THE WEIGHT TENDERED OR DELIVERED BY 25 PERCENT; IF THE WEIGHT HAD BEEN 25 PERCENT LESS, YOU WOULD HAVE RECEIVED ONLY 47,676 POUNDS AND, BASED ON A MINIMUM WEIGHT OF 50,000 POUNDS, THE FREIGHT CHARGES WOULD HAVE BEEN THE SAME: $904.25.

THE QUESTION HERE, HOWEVER, DOES NOT APPEAR TO BE ONE IN WHICH THE GOVERNMENT FAILED TO SHIP TO YOU ALL OF THE LOT OFFERED FOR SALE. RATHER IT APPEARS THAT THE ESTIMATE OF THE QUANTITY IN THE LOT OF ELECTRONIC SCRAP WAS ERRONEOUS. IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND BY 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 SALES TRANSACTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525 (1931); W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31 (1931), CERTIORARI DENIED 284 U.S. 676; AND I. SHAPIRO & COMPANY V. UNITED STATES, 66 CT. CL. 424 (1928); ALLOYS AND CHEMICALS CORPORATION V. UNITED STATES, 324 F.2D 509 (1963); STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 241 F.2D 677 (1957).

THE DISCLAIMER OF WARRANTY IN CONDITION NO. 2 APPLIED TO THE QUANTITY AND THE WEIGHT OF THE PROPERTY OFFERED FOR SALE. THE PROVISIONS OF CONDITION 12 MUST BE REGARDED AS MODIFYING THE GENERAL DISCLAIMER OF WARRANTY IN CONDITION 2. IN OTHER WORDS, UNDER CONDITION 12 YOU WERE NOT BOUND TO ACCEPT PROPERTY OFFERED FOR SALE ON A "WEIGHT" BASIS WHERE THE WEIGHT VARIATION WAS MORE THAN 25 PERCENT ABOVE OR BELOW THAT LISTED IN THE INVITATION. AND UNDER CONDITION NO. 15 THE GOVERNMENT'S LIABILITY TO THE PURCHASER IS LIMITED TO A "REFUND OF SUCH PORTION OF THE PURCHASE PRICE AS THE GOVERNMENT MAY HAVE RECEIVED."

THUS IT WAS YOUR RIGHT UNDER THE CONTRACT TO NOTIFY THE GOVERNMENT THAT YOU WOULD NOT ACCEPT THE PROPERTY WHEN THE VARIATION IN WEIGHT WAS MORE THAN 25 PERCENT OF THE ADVERTISED WEIGHT. SINCE THE ESTIMATED WEIGHT OF THE ELECTRONIC SCRAP WAS STATED AS 63,568 POUNDS AND SINCE THE VARIATION IN WEIGHT WAS KNOWN TO YOU PRIOR TO THE RELEASE OF THE PROPERTY TO YOU, IF YOU DID NOT WANT TO ACCEPT A WEIGHT VARIATION OF MORE THAN 25 PERCENT, YOU SHOULD HAVE ADVISED THE GOVERNMENT CONTRACTING OFFICER THAT THE AVAILABLE QUANTITY WAS NOT ACCEPTABLE.

SINCE YOU FAILED TO DO SO, YOU WAIVED YOUR RIGHT UNDER CONDITION 12 TO REJECT THE SHIPMENT BECAUSE OF THE VARIATION IN WEIGHT. THE REMEDY AFFORDED THE PURCHASER UNDER THAT CONDITION FOR A VARIATION IN WEIGHT MUST BE REGARDED AS DETERMINING THE RIGHTS OF THE PARTIES TO THE CONTRACT. THERE IS THEREFORE NO AUTHORITY UNDER THE CONTRACT TO AFFORD YOU ANY RELIEF BEYOND THAT HERETOFORE AFFORDED YOU WHICH WAS AN ADJUSTMENT IN THE PURCHASE PRICE FOR THE UNDELIVERED PORTION OF THE ESTIMATED QUANTITY. ACCORDINGLY, THE SETTLEMENT OF JUNE 13, 1972, IS SUSTAINED.