B-131491, MAY 9, 1957

B-131491, MAY 9, 1957

TO K. K. EIWA SHOKAI:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 23, 1957, REQUESTING REVIEW OF SETTLEMENT DATED DECEMBER 5, 1956, WHICH DISALLOWED YOUR CLAIM FOR AN ADJUSTMENT IN THE PURCHASE PRICE OF A QUANTITY OF SPARE PARTS AND TOOLS PURCHASED FROM THE UNITED STATES ARMY, TOKYO, JAPAN, UNDER CONTRACT NO. DA (S) 92-557-FEC-9670, DATED JANUARY 30, 1956.

UNDER THE CONTRACT YOU WERE AWARDED ITEMS NOS. 1 AND 2 OF THE INVITATION FOR BIDS ON A "PRICE FOR THE LOT" BASIS. PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT PROVIDED THAT THE PROPERTY WAS OFFERED "AS IS" AND "WHERE IS" AND THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION, BUT THAT THE GOVERNMENT MADE NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESS, OR IMPLIED, AS TO QUANTITY OR WEIGHT. ALSO, THE BIDDERS WERE WARNED, UNDER PARAGRAPH 8, THAT IN THE EVENT OF ANY VARIATION BETWEEN THE QUANTITY OR WEIGHT LISTED FOR ANY ITEM AND THE QUANTITY OR WEIGHT OF SUCH ITEM TENDERED OR DELIVERED TO THE PURCHASER, NO ADJUSTMENT FOR SUCH VARIATION WOULD BE MADE WHERE AN AWARD WAS MADE ON A "PRICE FOR THE LOT" BASIS.

YOU STATE IN YOUR LETTER OF MARCH 23, 1957, THAT THE MATERIAL OFFERED FOR SALE UNDER ITEM 1 WAS PACKED IN APPROXIMATELY 200 CASES AND THAT ONLY THREE OF THESE CASES WERE OPEN FOR INSPECTION, WHICH WERE PACKED TO 80 PERCENT OF THEIR CAPACITY. ALSO, YOU CONTEND THAT THE MACHINES OFFERED FOR SALE UNDER ITEM 2 WERE PACKED IN APPROXIMATELY 100 CASES AND THAT THE TWO REPRESENTATIVE CASES CONTAINED ONE MOTOR EACH. YOU ALLEGE THAT WHEN THE MATERIALS WERE DELIVERED, THE QUANTITY WAS CONSIDERABLY LESS THAN ADVERTISED AND IT APPEARS TO BE YOUR CONTENTION THAT THE GOVERNMENT MISREPRESENTED THE WEIGHT OF THESE ITEMS OFFERED FOR SALE.

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT AN EXPRESS DISCLAIMER OF WARRANTY--- AS HERE--- VITIATED ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; UNITED STATES V. KELLY, 112 F.SUPP. 831; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151. TO ILLUSTRATE, THE CASE OF MAGUIRE AND COMPANY V. UNITED STATES, 273 U.S. 67, INVOLVED AN "AS IS" SALE OF CLOTH BY THE GOVERNMENT UNDER AN INVITATION WHICH GAVE THE WEIGHT PER YARD OF THE MATERIALS. IT TURNED OUT THAT THE MATERIALS DID NOT CONFORM TO THE SPECIFIED WEIGHT. IN DENYING THE PLAINTIFF RECOVERY, THE UNITED STATES SUPREME COURT HELD THAT THE GIVEN WEIGHT COULD NOT BE CONSIDERED AS A WARRANTY UNDER THE ADVERTISED TERMS OF THE SALE. ALSO, IN LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, AN AGENT FOR THE GOVERNMENT LISTED FOR SALE CERTAIN ITEMS OF JUNK AT SEVERAL LOCATIONS, SETTING FORTH THE WEIGHTS AND KINDS OF EACH. ALTHOUGH THE QUANTITIES TURNED OUT TO BE MUCH LESS THAN THOSE SHOWN IN THE ADVERTISEMENT, THE PLAINTIFFS WERE HELD NOT TO HAVE ANY CAUSE OF ACTION, SINCE, AS STATED BY THE SUPREME COURT, THE MENTIONING OF THE QUANTITIES ,CANNOT BE REGARDED AS IN THE NATURE OF A WARRANTY, BUT MERELY AS AN ESTIMATE OF THE PROBABLE AMOUNTS IN REFERENCE TO WHICH GOOD FAITH ONLY COULD BE REQUIRED OF THE PARTY MAKING IT.'

IN VIEW OF THE FOREGOING, THERE EXISTS NO LEGAL BASIS FOR MAKING AN ADJUSTMENT OF THE CONTRACT PRICE BASED UPON A SHORTAGE OF THE ITEMS INVOLVED UNLESS IT CAN BE SHOWN THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH. IN THIS REGARD, WHILE IT IS REPORTED THAT THE ESTIMATED WEIGHTS OF EACH ITEM SHOULD HAVE BEEN APPROXIMATELY 10 TONS THERE IS NO EVIDENCE THAT THE DISPOSAL OFFICER KNEW WHEN THE INVITATION FOR BIDS WAS ISSUED, THAT THE WEIGHTS SHOWN THEREIN WERE INCORRECT. FROM THE EVIDENCE PRESENTED THERE IS NO REASONABLE BASIS FOR CONCLUDING THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH.