B-131001, JUL. 3, 1957

B-131001, JUL. 3, 1957

TO AMERICAN NICKEL ALLOY MANUFACTURING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 13, 1957, REQUESTING REVIEW OF THE SETTLEMENT OF FEBRUARY 8, 1957, WHICH DISALLOWED YOUR CLAIM FOR REFUND IN THE AMOUNT OF $825.54, REPRESENTING THE SUM PAID BY YOU IN CONNECTION WITH THE PURCHASE OF CERTAIN SURPLUS MATERIAL UNDER CONTRACT NO. AF 33 (601) A-1529 DATED JANUARY 19, 1956, PLUS PACKING IN THE SUM OF $33.

THE CONTRACT COVERED THE PURCHASE FROM THE WRIGHT-PATTERSON AIR FORCE BASE, OHIO, OF MATERIAL DESCRIBED UNDER ITEM NO. 4 OF THE INVOLVED INVITATION AS 510 POUNDS OF CODE 12-JET ALLOY SCRAP CONSISTING OF INCONEL X, FLAME HOLDERS, AT A UNIT PRICE OF $1.6187, OR A TOTAL PRICE OF $82.54. AFTER PAYMENT OF THE PURCHASE PRICE AND DELIVERY OF THE MATERIAL, YOU ALLEGED A SHORTAGE OF 54 POUNDS OF SCRAP AND THAT THE MATERIAL CONSISTED OF FLAME HOLDERS AND TURBINE WHEELS AND WAS NOT INCONEL X BUT MERELY A STAINLESS STEEL ALLOY WITH A NICKEL CONTENT OF ABOUT 8 TO 17 PERCENT ONLY WHEREAS INCONEL X ORDINARILY HAD A NICKEL CONTENT OF 70 PERCENT.

IN REQUESTING REVIEW OF THE DISALLOWANCE OF YOUR CLAIM FOR REFUND OF THE PURCHASE PRICE OF THE MATERIAL, YOU STATE THAT A MIX-UP OCCURRED WHEN THE MATERIAL IN QUESTION WAS SHIPPED TO YOU SINCE OVER ONE-HALF OF THE MATERIAL CONSISTED OF TURBINE WHEELS. YOU ALSO STATE THAT IT IS YOUR OPINION THAT WHEN IT CAME TO SHIPPING THE MATERIAL TO YOU, THE INCONEL X FLAME HOLDERS "HAD BEEN DISPOSED OF IN ANOTHER DIRECTION OR COULD NOT BE FOUND" AND WERE, FOR THIS AND OTHER REASONS REPLACED WITH THE MATERIAL WHICH YOU RECEIVED. HOWEVER, INSOFAR AS THE RECORD SHOWS, THE MATERIAL ON DISPLAY FOR INSPECTION BY PROSPECTIVE BIDDERS WAS THAT SHIPPED TO YOU AND YOU HAVE FURNISHED NO EVIDENCE TO THE CONTRARY.

AS POINTED OUT IN OUR SETTLEMENT OF FEBRUARY 8, 1957, PARAGRAPH ONE OF THE GENERAL SALE TERMS AND CONDITIONS SPECIFICALLY PROVIDED AND URGED PROSPECTIVE BIDDERS TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS AND THAT FAILURE TO INSPECT WOULD NOT CONSTITUTE A GROUND FOR A CLAIM OR WITHDRAWAL OF THE BID AFTER OPENING. THIS, APPARENTLY YOU FAILED TO DO. MOREOVER, PARAGRAPH TWO OF THE DOCUMENT REFERRED TO ABOVE PROVIDES THAT THE GOVERNMENT "MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THE QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE, AND NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON THE FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED.'

THE COURTS ON NUMEROUS OCCASIONS 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, PRECLUDING ANY CLAIM FOR NONCONFORMITY OF THE GOODS WITH THE DESCRIPTION. SEE W. E. NEDGER COMPANY V. UNITED STATES, 52 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 C.CLS. 151. IN THE CASE OF STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 241 F.2D 677, WHICH INVOLVED THE SALE OF SURPLUS WHEELS, THE COURT STATED AT PAGE 679, AS FOLLOWS:

"IT IS APPARENT FROM THE AUTHORITIES THAT THE USUAL GOVERNMENT SURPLUS GOODS CONTRACT IS NOT GOVERNED BY THE USUAL NICETIES OF CONTRACT LAW. THEY ARE "WHERE IS, AS IS" SALES WITH WARRANTIES AND REPRESENTATIONS EXPRESSLY NEGATIVED. INSPECTION PRIOR TO BIDDING IS URGED. THE RULE OF CAVEAT EMPTOR IN SUCH CASES WAS CERTAINLY INTENDED TO BE APPLIED TO THE FURTHEST LIMIT THAT CONTRACT STIPULATIONS COULD ACCOMPLISH IT. * * *"

THE COURT CITED AS AUTHORITIES THE CASES OF UNITED STATES V. SILVERTON, 200 F.2D 824; MAGUIRE AND COMPANY V. UNITED STATES, 273 U.S. 67; AMERICAN ELASTICS V. UNITED STATES, 187 F.2D 109; UNITED STATES V. KELLY, 112 F.SUPP. 831. 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 DISPOSING OF SURPLUS MATERIALS THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS IGNORANT OF THE CONDITION OF THE GOODS IT SELLS. THAT FACT IS MADE KNOWN TO ALL BIDDERS BY THE "AS IS" TERMS OF THE CONTRACT WHEREBY THE PARTIES AGREE THAT THE RISK AS TO THE CONDITION OF THE MATERIAL SOLD IS ASSUMED BY THE PURCHASER AS ONE OF THE ELEMENTS OF THE BARGAIN. IN THE CASE OF OVERSEAS NAVIGATION CORPORATION V. UNITED STATES, 131 C.CLS. 70, THE COURT HELD THAT THE TERMS OF THE SALE CONTRACT THERE UNDER CONSIDERATION INCLUDING ITS "AS IS, WHERE IS" PROVISIONS, SPOKE FOR THEMSELVES AND THE PLAINTIFF WAS LEGALLY BOUND BY THEM.

EVEN IF THE GOVERNMENT'S DESCRIPTION OF THE PROPERTY HERE INVOLVED HAS BEEN INACCURATE, THERE IS NO INDICATION IN THE RECORD THAT IT WAS NOT PREPARED IN GOOD FAITH OR THAT THERE WAS BETTER INFORMATION AVAILABLE TO THE GOVERNMENT. THERE WAS AN EXPRESS DISCLAIMER OF ANY WARRANTY THAT THE PROPERTY WAS AS DESCRIBED. THE MERE FACT THAT THE GOVERNMENT WAS HONESTLY MISTAKEN ABOUT THE NICKEL CONTENT OF THE SCRAP DOES NOT ENTITLE YOU TO RELIEF. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525, 75 A.L.R. 1017; AND HOOVER V. UTAH NURSERY COMPANY, 7 F.2D 270.

ON THE BASIS OF THE FACTS AND EVIDENCE PRESENTLY OF RECORD, THERE APPEARS TO BE NO LEGAL BASIS FOR AUTHORIZING A REFUND OF THE PURCHASE PRICE, AS REQUESTED BY YOU, OR FOR AUTHORIZING ANY ADJUSTMENT WHATEVER IN THE PRICE FIXED IN THE CONTRACT FOR THE MATERIAL INVOLVED. ACCORDINGLY, THE SETTLEMENT OF FEBRUARY 8, 1957, IS SUSTAINED.