B-151993, SEP. 9, 1963

B-151993, SEP. 9, 1963

TO THE FRANKLIN METALS COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 12, 1963, REQUESTING IN EFFECT RECONSIDERATION OF THE SETTLEMENT OF JUNE 5, 1963, WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR $1,224.07 ALLEGED TO BE DUE BY REASON OF THE FAILURE OF THE GOVERNMENT TO DELIVER 26,900 POUNDS OF SCRAP BRASS TURNINGS PURCHASED FROM THE DEFENSE SURPLUS SALES OFFICE, MARINE CORPS SUPPLY CENTER, ALBANY, GEORGIA, AS ITEM NO. 2 UNDER INVITATION NO. 22-S-63-17, CONTRACT NO. DSA-22-S-319, DATED AUGUST 3, 1962.

THE INVITATION OFFERED FOR SALE, AMONG OTHER THINGS, 50,000 POUNDS OF SCRAP BRASS TURNINGS. THE GENERAL SALE TERMS AND CONDITIONS CONTAINED THE USUAL DISCLAIMER OF WARRANTY (CONDITION NO. 2) AS TO QUANTITY, KIND, CHARACTER, WEIGHT, ETC., OF THE PROPERTY FOR SALE AND EXCEPT AS PROVIDED IN CONDITIONS NOS. 8 AND 11, NO REQUEST FOR ADJUSTMENT IN PRICE OR RESCISSION OF THE SALE WAS TO BE CONSIDERED. CONDITIONS NOS. 8 AND 11 PROVIDED AS FOLLOWS:

"8. ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT. WHEN PROPERTY IS SOLD ON A "UNIT PRICE" BASIS, THE GOVERNMENT RESERVES THE RIGHT TO VARY THE QUANTITY OR WEIGHT DELIVERED BY 10 PERCENT FROM THE QUANTITY OR WEIGHT LISTED IN THE INVITATION; AND THE PURCHASER AGREES TO ACCEPT DELIVERY OF ANY QUANTITY OR WEIGHT WITHIN THESE LIMITS. 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. NO ADJUSTMENT FOR VARIATION WILL BE MADE WHERE PROPERTY IS SOLD ON A "PRICE FOR THE LOT" BASIS.'

"11. LIMITATION ON GOVERNMENT'S LIABILITY. EXCEPT FOR TRANSPORTATION CHARGES WHEN A RETURN OF PROPERTY AT GOVERNMENT COST IS AUTHORIZED BY THE GOVERNMENT, 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 CEIVED.'

IN YOUR LETTER OF MARCH 6, 1963, TO THE CONTRACTING OFFICE YOU POINTED OUT THAT YOU HAD EMPLOYED A LOADING CONTRACTOR TO LOAD THE BRASS TURNINGS AND THAT A COPY OF THE CARLOAD WEIGHT REPORT ISSUED AT MACON, GEORGIA, ON AUGUST 18, 1962, SHOWS THAT THE CAR CONTAINED A NET POUNDAGE OF 18,100, OR A SHORTAGE OF 26,900 POUNDS IN THE MINIMUM QUANTITY YOU WERE BOUND TO ACCEPT. NEVERTHELESS, YOUR PURCHASER USED THE SHIPMENT AND YOU PRESENTED A CLAIM FOR $1,224.07 ALLEGED TO BE DUE BY REASON OF THE SHORTAGE. THE CLAIM CONSISTS OF (1) THE AMOUNT OF $242.54 AS INCREASED FREIGHT COSTS BY REASON OF PAYMENT OF FREIGHT AT LESS-THAN-CARLOAD RATE; (2) THE SUM OF $75 PAID THE LOADING CONTRACTOR; AND (3) THE SUM OF $906.53, REPRESENTING THE DIFFERENCE OF $0.0337 PER POUND YOU WERE OBLIGED TO PAY FOR 26,900 POUNDS OF BRASS TURNINGS IN ORDER TO FILL YOUR CONTRACT WITH YOUR PURCHASER.

THE MATTER HERE INVOLVED DOES NOT APPEAR TO BE ONE IN WHICH THE GOVERNMENT FAILED TO SHIP YOU ALL OF THE LOT OFFERED FOR SALE. RATHER IT APPEARS THAT THE ESTIMATE OF THE QUANTITY IN THE LOT OF BRASS TURNINGS WAS ERRONEOUS. IT HAS CONSISTENTLY BEEN HELD BY THE COURTS AND 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 SALE TRANSACTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284, U.S. 676; AND I. SHAPIRO AND COMPANY V. UNITED STATES, 66 CT.CL. 424. THE DISCLAIMER OF WARRANTY IN CONDITION NO. 2 APPLIED TO QUANTITY AND WEIGHT OF THE PROPERTY OFFERED FOR SALE. THE PROVISIONS OF CONDITIONS NOS. 8 AND 11 MUST BE REGARDED AS MODIFYING THE GENERAL DISCLAIMER OF WARRANTY IN CONDITION NO. 2. IN OTHER WORDS, UNDER CONDITION NO. 8 YOU WERE NOT BOUND TO ACCEPT PROPERTY OFFERED FOR SALE ON A "UNIT PRICE" BASIS WHERE THE QUANTITY OR WEIGHT VARIATION WAS MORE THAN 10 PERCENT BEYOND OR BELOW THAT LISTED IN THE INVITATION. ALSO, CONDITION NO. 11 LIMITS THE GOVERNMENT'S LIABILITY TO THE PURCHASER TO A "REFUND OF SUCH PORTION OF THE PURCHASE PRICE AS THE GOVERNMENT MAY HAVE RECEIVED" AND TO "TRANSPORTATION CHARGES WHEN A RETURN OF PROPERTY AT GOVERNMENT COST IS AUTHORIZED BY THE GOVERNMENT.'

IT WAS YOUR RIGHT UNDER THE CONTRACT TO NOTIFY THE GOVERNMENT THAT YOU WOULD NOT ACCEPT THE PROPERTY IN QUESTION WHEN THE VARIATION IN WEIGHT WAS MORE THAN 10 PERCENT OF THE ADVERTISED WEIGHT. SINCE THE ESTIMATED WEIGHT OF THE BRASS TURNINGS WAS STATED AS 50,000 POUNDS AND SINCE A VARIATION IN POUNDAGE MUST NECESSARILY HAVE BEEN ANTICIPATED BY BOTH PARTIES TO THE CONTRACT IT WAS INCUMBENT UPON YOU TO ARRANGE WITH YOUR PURCHASER TO NOTIFY YOU OF THE POUNDAGE RECEIVED BEFORE USING THE PROPERTY. IN THAT EVENT THE GOVERNMENT COULD THEN HAVE DETERMINED WHETHER THE PROPERTY SHOULD BE RETURNED AND ALL TRANSPORTATION CHARGES ASSUMED BY THE GOVERNMENT OR WHETHER THE PROPERTY COULD BE RESOLD WITHOUT RETURNING IT TO MACON, GEORGIA. IN FACT, YOU ADMIT IN YOUR LATEST LETTER THAT YOU KNEW OF THE WEIGHT "AFTER CAR WAS ENROUTE TO DESTINATION.' AT THAT TIME YOU SHOULD HAVE ADVISED YOUR PURCHASER NOT TO UNLOAD THE CAR AND SHOULD HAVE CONTACTED THE CONTRACTING OFFICER FOR ADVICE AS TO WHAT DISPOSITION WAS TO BE MADE OF THE PROPERTY IF YOU DID NOT DESIRE TO ACCEPT A QUANTITY OR WEIGHT VARIATION OF MORE THAN 10 PERCENT.

SINCE YOU FAILED TO DO SO YOU WAIVED YOUR RIGHT UNDER CONDITION NO. 8 TO REJECT THE SHIPMENT BECAUSE OF VARIATION IN QUANTITY OR WEIGHT. THE REMEDY AFFORDED THE PURCHASER UNDER SAID CONDITION FOR VARIATION IN QUANTITY OR WEIGHT MUST BE REGARDED AS DETERMINING THE RIGHTS OF THE PARTIES TO THE CONTRACT. ACCORDINGLY, THERE IS NO AUTHORITY UNDER THE CONTRACT TO AFFORD YOU ANY RELIEF BEYOND THAT HERETOFORE AFFORDED YOU WHICH WAS A REFUND OF THE PURCHASE PRICE FOR THE UNDELIVERED PORTION OF THE ESTIMATED QUANTITY AND ACCORDINGLY THE SETTLEMENT OF JUNE 5, 1963, IS SUSTAINED.