B-140310, SEP. 9, 1959

B-140310, SEP. 9, 1959

TO THE BUREAU OF SUPPLIES AND ACCOUNTS:

REFERENCE IS MADE TO A LETTER DATED JULY 24, 1959 (YOUR REFERENCE R11.2 18) 18/N74-3), SUBMITTING THE MATTER OF A MISTAKE IN BID ALLEGED AFTER AWARD OF SALES CONTRACT N109S-44701 (S) (SALES INVITATION NO. D 139-59- 189) TO PECK IRON AND METAL CO., INC. (HEREINAFTER REFERRED TO AS PECK), PORTSMOUTH, VIRGINIA, BY NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA.

PECK WAS AWARDED A TOTAL OF 168 AIRCRAFT ENGINES UNDER THE SALES INVITATION. OF THE TOTAL QUANTITY, 44 ENGINES WERE MODEL 1820-87 AND 1820 -97, WHEREAS THE REMAINING ENGINES WERE MODEL 2600-20. THE PERTINENT FACTS ARE STATED AS FOLLOWS BY THE NAVY:

"2. PRIOR TO BID OPENING, THE PURCHASER SENT HIS REPRESENTATIVE TO THE MAS NORFOLK TO MAKE INSPECTION. SINCE THE PURCHASER CONSIDERED THAT THOSE ENGINES HAD NO COMMERCIAL SALES VALUE, HE WAS INTERESTED IN OBTAINING THE WEIGHTS OF THE ENGINES FOR RECLAMATION OF THE METAL CONTENT ONLY. ARRIVAL AT THE NAVAL AIR STATION, THE PURCHASER'S REPRESENTATIVE REQUESTED THE REMOVAL OF AN ENGINE FROM ITS METAL CONTAINER FOR WEIGHING, BUT WAS ADVISED THAT THE WEIGHTS OF THE ENGINES, AS WELL AS THE WEIGHTS OF THE CONTAINERS WERE STENCILED ON THE OUTSIDE OF EACH METAL CONTAINER MAKING REMOVAL OF THE ENGINE UNNECESSARY. WITH THIS INFORMATION THE BUYER'S REPRESENTATIVE MADE A TALLY OF THE ENGINE WEIGHTS FROM THE VARIOUS CONTAINERS, AND RETURNED THE INFORMATION TO THE PURCHASER, WHO BASED HIS BID OF $118.80 FOR EACH OF THE MODEL 1820 ENGINE ON THE SALE, AND WAS SUBSEQUENTLY AWARDED ALL OF THEM.'

THE PURCHASER LATER DISCOVERED THAT THE 44-"MODEL 1820" ENGINES WERE NOT IN THEIR ORIGINAL MANUFACTURER'S CONTAINERS, HENCE THE WEIGHTS STENCILED ON THE OUTSIDE OF THE CANS HAD LED HIM TO COMPUTE HIS BID AT A HIGHER PRICE THAN THE ACTUAL SCRAP VALUE OF THE ENGINES.

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 REPRODUCTION, EXPRESS OR IMPLIED AS TO QUANTITY OR WEIGHT.

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT AN EXPRESS DISCLAIMER OF WARRANTY--- AS HERE--- VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. SEE W. E. HODGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED284 U.S. 676; UNITED STATES V. KELLY, 112 F.SUPP. 831; AND 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 "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 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.' ACTUALLY IN THE INSTANT CASE THE INVITATION DID NOT SHOW ANY WEIGHTS FOR THOSE ENGINES. WHILE IT MAY WELL BE THAT THE ERRONEOUS VERBAL STATEMENT MADE BY THE GOVERNMENT'S REPRESENTATIVE REGARDING THE WEIGHT MARKED ON THE CONTAINERS MAY HAVE MISLED THE BIDDER, ATTENTION IS SPECIFICALLY INVITED TO PARAGRAPH 12 OF THE GENERAL SALE TERMS AND CONDITIONS WHICH READS AS FOLLOWS:

"12. VERBAL MODIFICATIONS.--- ANY ORAL STATEMENT BY ANY REPRESENTATIVE OF THE GOVERNMENT, MODIFYING OR CHANGING ANY CONDITIONS OF THIS CONTRACT, IS AN EXPRESSION OF OPINION ONLY AND CONFERS NO RIGHT UPON THE PURCHASER.'

IN VIEW OF THE FOREGOING THERE EXISTS NO LEGAL BASIS FOR MAKING AN ADJUSTMENT OF THE CONTRACT PRICE BASED UPON A SHORTAGE IN WEIGHT UNLESS IT CAN BE SHOWN THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH.