B-157722, OCT. 18, 1965

B-157722, OCT. 18, 1965

TO GOLDMAN TITANIUM CORP:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 14, 1965, REQUESTING REVIEW OF OUR SETTLEMENT DATED SEPTEMBER 3, 1965, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF THE PURCHASE PRICE PAID FOR 927.2 POUNDS OF ZIRCALOY 2 SCRAP, PLUS FREIGHT CHARGES, WHICH WAS OFFERED FOR SALE UNDER INVITATION NO. 222 BY THE KNOLLS ATOMIC POWER LABORATORY, SCHENECTADY, NEW YORK, AS AN AGENT FOR THE UNITED STATES ATOMIC ENERGY COMMISSION.

IN RESPONSE TO THE INVITATION, YOUR FIRM, WHICH WAS FORMERLY KNOWN AS GOLDMAN-HIRSCH CORP., OFFERED TO PURCHASE THE ZIRCALOY 2 SCRAP LOCATED AT THE FIRM OF WAH CHANG CORPORATION, ALBANY, OREGON, AT A PRICE OF $0.40 PER POUND. YOUR BID WAS ACCEPTED ON MARCH 25, 1964.

BY LETTER DATED JULY 23, 1964, YOU ADVISED THE SALES OFFICE THAT AFTER A LONG DELAY YOU RECEIVED THE SCRAP MATERIAL AND THAT YOU FOUND THAT THE MATERIAL CONSISTED OF "ZIRCALOY 2 URNINGS" AS OPPOSED TO SHEARINGS. YOU STATED THAT THE MATERIAL WAS REPRESENTED IN THE LETTER INVITATION AS SOLID MATERIAL AND THAT WHEN ONE OF YOUR REPRESENTATIVES ATTEMPTED TO INSPECT THIS MATERIAL ON HIS LAST VISIT TO ALBANY, OREGON, THE WAH CHANG CORPORATION, THE HOLDING ACTIVITY, WAS UNABLE TO LOCATE THE SCRAP MATERIAL. IN THIS CONNECTION, YOU WERE ADVISED IN THE SETTLEMENT THAT AN EXAMINATION OF THE VISITORS LOGBOOK AT THE PLANT OF THE WAH CHANG CORPORATION FAILED TO DISCLOSE A RECORD OF YOUR REPRESENTATIVE HAVING VISITED THAT FACILITY.

IN YOUR LETTER REQUESTING REVIEW YOU STATE THAT YOUR REPRESENTATIVE DID NOT VISIT THE PLANT OF THE WAH CHANG CORPORATION BUT THAT YOUR REPRESENTATIVE CONTACTED THE CORPORATION BY TELEPHONE. YOU STATE FURTHER THAT YOU ARE FULLY AWARE OF THE PROVISIONS OF ARTICLE 3 OF THE SALE TERMS AND CONDITIONS WHICH CONTAINS THE DISCLAIMER OF WARRANTY AND FAILURE TO INSPECT CLAUSES BUT THAT SINCE YOUR REPRESENTATIVE WAS NOT GIVEN THE OPPORTUNITY TO INSPECT THE ZIRCALOY SCRAP BEFORE THE SUBMISSION OF YOUR BID, SUCH PROVISIONS SHOULD NOT BE APPLICABLE IN YOUR CASE. ON SUCH BASIS, YOU REQUEST AN ADJUSTMENT OF THE CONTRACT PRICE OF ZIRCALOY SCRAP.

WHILE ORDINARILY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION --- AND THIS APPEARS TO BE THE BASIS OF YOUR CLAIM--- NO SUCH WARRANTY, HOWEVER, MAY BE IMPLIED WHERE, AS HERE, THE SALES CONTRACT CONTAINS AN EXPRESS DISCLAIMER. MOREOVER, THE GOVERNMENT IN DISPOSING OF ITS SURPLUS PROPERTY IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS NOT AWARE OF THE TRUE DESCRIPTION OF THE GOODS IT SELLS. LUMBRAZO V. WOODRUFF, 175 N.E. 525; UNITED STATES V. KELLY, 112 F.SUPP. 831; I. SHAPIRO AND CO. V. UNITED STATES, 66 CT.CL. 424; AND MAGUIRE AND CO. V. UNITED STATES, 273 U.S. 67. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH PROVISIONS, IN THE ABSENCE OF BAD FAITH OR FRAUD, BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT,AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER. ALSO, THE COURTS HAVE HELD THAT AN EXPRESS DISCLAIMER OF WARRANTY AS USED IN SURPLUS PROPERTY SALES BY THE GOVERNMENT PRECLUDES A SUIT FOR DAMAGES ON THE THEORY OF MUTUAL MISTAKE. UNITED STATES V. HATHAWAY, 242 F.2D 897; AND AMERICAN SANITARY RAG CO. V. UNITED STATES 142 CT.CL. 293.

THERE IS NO EVIDENCE OF WILLFUL MISREPRESENTATION OR OF BAD FAITH ON THE PART OF THE GOVERNMENT. IT DOES NOT APPEAR THAT THE OFFICER IN CHARGE OF THE SALE KNEW THAT THE MATERIAL WAS NOT AS DESCRIBED. THE MATERIAL WAS SOLD FOR WHAT THE GOVERNMENT THOUGHT IT TO BE. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGED TO ACT IN GOOD FAITH, AND THIS IT DID.

IN REGARD TO YOUR STATEMENT THAT YOUR REPRESENTATIVE WAS NOT GIVEN THE OPPORTUNITY TO INSPECT THE ZIRCALOY SCRAP PRIOR TO THE SUBMISSION OF YOUR BID, IT MAY BE STATED THAT EVEN IF THE AGENCY DID NOT PERMIT YOUR REPRESENTATIVE TO INSPECT THE SCRAP MATERIAL AND YOU STILL SUBMITTED A BID, THERE WOULD BE APPLICABLE THE RULE ESTABLISHED BY THE DECISIONS OF THIS OFFICE THAT WHERE A BIDDER FAILS TO MAKE INSPECTION UNDER SUCH A CONTRACT OF SALE--- WHETHER SUCH FAILURE WAS DUE TO THE BIDDER'S OPINION THAT INSPECTION WAS NOT NECESSARY OR WHETHER THE INSPECTION WAS IMPRACTICAL, IF NOT IMPOSSIBLE--- THE BIDDER HAS ELECTED TO ASSUME ANY RISK WHICH MIGHT EXIST BY REASON OF A VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY SET FORTH IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. THE BIDDER'S RESPONSIBILITIES IN THIS CONNECTION APPEAR TO BE CLEARLY SET FORTH IN PAXTON-MITCHELL COMPANY V. UNITED STATE, 172, F.SUPP. 463, WHERE IT WAS HELD THAT, NOTWITHSTANDING THE DIFFICULTIES ATTENDANT UPON AN INSPECTION, IT IS INCUMBENT UPON THE BIDDER TO MAKE THE SORT OF INSPECTION THAT IS EFFECTUAL.

ACCORDINGLY, WE FIND NO LEGAL BASIS UPON WHICH YOUR CLAIM MAY BE ALLOWED AND THE SETTLEMENT OF SEPTEMBER 3, 1965, MUST BE, AND IS, SUSTAINED.