B-143411, JUL. 29, 1960

B-143411, JUL. 29, 1960

TO COSMOPOLITAN TRADING CO., LTD.:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 20, 1960, REQUESTING REVIEW OF GENERAL ACCOUNTING OFFICE SETTLEMENT DATED APRIL 7, 1960, WHICH DISALLOWED YOUR CLAIM IN THE AMOUNT OF 550,000 HWAN ($1,100) FOR REFUND OF THE AMOUNT DEPOSITED BY YOU IN CONNECTION WITH NEGOTIATED CONTRACT NO. DA/S/92-093- FEC-3115.

THE CONTRACT COVERED THE SALE OF SURPLUS CLOTHING BY THE PROPERTY DISPOSAL CONTRACTING OFFICE, QUARTERMASTER SECTION, EIGHTH U.S. ARMY, APO 301, THE CLOTHING BEING LOCATED AT PUSAN, KOREA. IN PARAGRAPH 1 OF GENERAL SALES TERMS AND CONDITIONS INCLUDED IN THE CONTRACT, IT WAS STATED:

"IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR WITHDRAWAL OF A BID AFTER OPENING.'

PARAGRAPH 11 OF SPECIAL SALES TERMS AND CONDITIONS REQUIRED FULL PAYMENT OF THE CONTRACT PRICE WITHIN 5 DAYS AFTER AWARD. PARAGRAPH 13 OF SPECIAL SALES TERMS AND CONDITIONS PROVIDED:

"FAILURE OF THE CONTRACTOR TO COMPLY WITH THE TERMS AND CONDITIONS OF THIS CONTRACT WILL, AT THE OPTION OF THE U.S. GOVERNMENT, BE BASIS FOR IMMEDIATE CANCELLATION OF THIS CONTRACT. IN THE EVENT OF CANCELLATION DUE TO DEFAULT ON THE PART OF THE CONTRACTOR, THE CONTRACTOR WILL FORFEIT HIS BID DEPOSIT AND PAYMENTS IN AN AMOUNT SUFFICIENT TO RECOVER LOSSES SUFFERED BY THE UNITED STATES.'

THE AMOUNT IN QUESTION WAS RECEIVED FROM YOU BY THE CONTRACTING OFFICER ON NOVEMBER 8, 1955, AS A PART OF THE PURCHASE PRICE. ON NOVEMBER 22, 1955, THE CONTRACT WAS CANCELED SINCE YOU HAD NOT ACCEPTED THE AWARD OR MADE PAYMENT OF THE BALANCE OF THE CONTRACT PRICE AND THE AMOUNT OF THE DEPOSIT WAS RETAINED BY THE GOVERNMENT. IT IS REPORTED THAT THE PROPERTY WAS SOLD SUBSEQUENTLY FOR A PRICE 866,000 HWAN LESS THAN THE PRICE STATED IN YOUR CONTRACT. THE AMOUNT DEPOSITED BY YOU HAS BEEN RETAINED BY THE GOVERNMENT IN ACCORDANCE WITH PARAGRAPH 13 OF SPECIAL SALES TERMS AND CONDITIONS ABOVE QUOTED.

YOU CONCEDE THAT YOU DID NOT INSPECT THE PROPERTY PRIOR TO SIGNING THE CONTRACT. SURPLUS GOVERNMENT PROPERTY IS SOLD ON AN "AS IS" BASIS AND THE LANGUAGE USED IN ADVERTISING SUCH PROPERTY HAS BEEN HELD REPEATEDLY BY THE COURTS TO CONSTITUTE AN EXPRESS DISCLAIMER OF ANY WARRANTY WHATEVER AS TO THE QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE OR DESCRIPTION OF ANY OF THE PROPERTY OR ITS FITNESS FOR ANY USE OR PURPOSE. MAGUIRE AND COMPANY V. UNITED STATES, 273 U.S. 7; LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER CO. V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; 36 COMP. GEN. 612.

NO LEGAL RESPONSIBILITY WOULD ATTACH TO THE GOVERNMENT IN THE ABSENCE OF A SHOWING OF BAD FAITH ON THE PART OF THE DISPOSAL OFFICER OR HIS AGENT. LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90. THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE CONTRACTING OFFICER OR HIS AGENTS ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THIS TRANSACTION.

FOR THE REASONS ABOVE SET OUT, THE SETTLEMENT OF APRIL 7, 1960, DISALLOWING YOUR CLAIM, APPEARS CORRECT AND HEREBY IS SUSTAINED.