ment between War Assets Administration and the manufacturer, distributor, or dealer who handles the property involved, whereby the manufacturer, distributor or dealer undertakes the disposal of the commodities covered by the agreement. This method is used when it has been determined that the class of property involved is of such a highly specialized or technical nature that proper disposal can be made only by qualified specialists in the industry or when a major portion of the property in question requires servicing, rehabilitation, or conversion and this service can best be performed by a manufacturer of the particular kind of property.

(b) Approved dealer agreement. This is an agreement between War Assets Administration and an "approved dealer" under which the dealer is authorized to solicit purchases of the property covered by the agreement and is paid a commission on sales developed by him and approved by War Assets Administration. This method is used only when the nature of the property in question renders it suitable for an approved dealer agreement.

Property for

(c) Loan of property. which there is no commercial use or demand may be loaned by War Assets Administration to private individuals or companies, or Government entities to permit experimentation and research in order to develop new uses for the property.

(d) Leases. (1) Surplus personal property may be leased by War Assets Administration for monetary considerations to an individual or concern or a Government entity for specified periods of time. Leases of personal property are limited to property which will not be substantially damaged or altered by extended use and which will be useful in the production of goods for the civilian economy, such as machine tools, production equipment, railroad equipment and other property as determined by the Administrator.

(2) Types of property suitable for lease to commercial users are equally available to non-commercial users. Regional directors may negotiate leases with State governments, their political subdivisions and instrumentalities and with eligible nonprofit institutions or instrumentalities upon request by such entities. Leases to noncommercial users may be

negotiated for any period of time not to exceed the estimated useful life of the property involved and may include provisions for an option to buy.

(e) Donations. Property having no commercial value or property for which the cost of care, handling, and disposition will exceed the proceeds, is available for donation to agencies or institutions supported by the Federal Government or agencies or institutions supported by any State or local government, or to nonprofit, educational or charitable institutions.

§ 8410.7 General pricing methods(a) Considerations on which price is based. Prices are based on the widest range of price data available. Information may be obtained from market surveys, manufacturers' catalogues, OPA ceiling or formulas such as the Clayton Formula and from previous sales by the War Assets Administration. Prices generally are f. o. b. common carrier (cars or trucks) but delivered prices and freight differentials may be established. Where fixed prices are applied, consideration will be given to location, condition, demand, packaging and packing, and special treatment applied for military requirements and the fact that the War Assets Administration is not a continuous source of supply in any line of goods. Each of the above represents a factor in establishing prices.

(b) Lot sizes. Minimum lot sizes are established to conform to normal commercial practices. Consideration is primarily given to the needs of small business in establishing lot sizes. Minimum lot sizes are so established as to move the property in volume and yet achieve a reasonable distribution of the quantity available. Maximum sizes are established to achieve equitable distribution when an offering of property is likely to be over-ordered.

(c) Price differentials. In many cases, in the fixed price method of sale, prices are set for two levels of trade-wholesale and retail. The differential between these prices corresponds to that which is normal in the trade, and reflects the difference in the cost of the distributive functions performed. Large retailers who perform certain intermediate distributive functions and who normally purchase in quantities far in excess of the small retailer and the small wholesaler, generally receive a discount of not

more than five (5) per cent below the prices to small retailers. However, where it is the normal commercial practice, or where unusual circumstances exist, a uniform price may be established to all buyers regardless of the level of trade or quantity purchased. In the case of certain types of aircraft a discount is given for quantity purchases.

§ 8410.8 Consultation with industry and business organizations. The War Assets Administration avails itself of the experience and considers recommendations of business and industry through industry advisory committees. Industry advisory committees are usually composed of representatives of a particular trade or industry affected by the disposal program. Also, liaison is maintained by the national and regional offices of the War Assets Administration with business and veterans organizations, trade association and civic groups to disseminate information concerning surplus property disposal activities.

§ 8410.9 Terms and conditions of sale. In accordance with section 15 of the Surplus Property Act, as amended, War Assets Administration, as a disposal agency, is authorized to dispose of surplus property by sale, exchange, lease, or transfer for cash, credit or other property, with or without warranty, and upon such other terms and conditions as the agency deems proper: Provided, That in the case of raw materials, consumer goods and small tools, hardware, and non-assembled articles which may be used in the manufacture of more than one type of product, no extension of credit shall be for a period longer than three years.

(a) Standard conditions of sale. War Assets Administration generally offers surplus personal property subject to the following standard conditions of sale:

Standard conditions. The Sales Memorandum and these standard conditions of sale constitute the entire agreement between the parties with respect to the sale of the property specified in the Sales Memorandum. No variations from or modifications thereof, and no representations made or warranties given by any representative, agent or employee of seller in variance thereof shall be of any effect unless specified in writing and included in the Sales Memorandum. The standard conditions of sale are as follows:

(1) Unless credit is provided for in the Sales Memorandum, payment must be made in U. S. coins and currency, money order,

certified check, cashier's check, check issued by a recognized finance company, traveler's check, U. S. Government check, the purchaser's own check, or draft drawn under irrevocable letter of credit prior to shipment of the property or its removal by purchaser.

(2) Seller makes no warranty, either express or implied, with respect to the property covered by the Sales Memorandum, except (a) seller warrants it has the right to transfer title to the property; and (b) seller warrants the accuracy of the description of the property: Provided, however, That if the property is described as new, seller warrants only that it has not been used. Seller's liability under this paragraph shall not exceed amount of purchase price.

(3) Sales are subject to such adjustment upon the request of the purchaser as the War Assets Administrator, or his authorized representative, in his sole discretion, may determine to be equitable under the circumstances, and any such determination shall be final. Requests for such adjustment will be considered only if filed in writing in the office of War Assets Administration responsible for the sale within fifteen (15) days (or such additional period as may be allowed in writing by the Administrator or such representative) after removal of the property by purchaser or delivery by a common carrier at the original destination.

(4) In case of error in the extension of prices, the unit price will govern.

(5) Unless otherwise specifically stated in the Sales Memorandum, sales are made f. o. b. common carrier (cars or trucks) and shipping expenses will be paid by purchaser. Specific shipping instructions from purchaser must be received by the regional office of War Assets Administration responsible for the sale within ten (10) days from the date of the Sales Memorandum; or if prior to the expiration of said ten day period purchaser notified seller that he will remove the property such removal must be effected within fifteen (15) days of the Sales Memorandum. Seller will not ship the property to more than one destination except in cases where such separate shipments each constitutes a carload, truckload or a minimum if established by War Assets Administration.

(6) If the property covered by Sales Memorandum is lost, damaged, or destroyed otherwise than by the fault or negligence of purchaser prior to removal or shipment during the applicable period prescribed in paragraph (5) above for removal or the issuance of shipping instructions, seller's liability shall, at election of seller, be limited to the replacement of the property lost, damaged, or destroyed or refunding any amount paid by purchaser therefor.

(7) If purchaser fails to issue shipping instructions or to remove the property within the applicable period prescribed in paragraph (5) above the risk of loss, damage or destruction of the property shall be upon purchaser. In the event of such failure purchaser shall,

upon demand, pay to seller reasonable storage charges if the property is stored on premises owned or controlled by the Government, or seller may store the property elsewhere for the account and at the expense of purchaser. Seller may also, upon failure or in the event of default on the part of purchaser in making payment or otherwise, upon giving ten (10) days written notice to purchaser, rescind the sale, or resell the property for the account of purchaser upon such terms and conditions as it deems proper, and purchaser shall, upon demand, pay to seller the amount of all losses and expenses incurred by reason of such, failure or default. The exercise by seller of one or more of the rights herein specified will not preclude seller from exercising any other rights it may have against purchaser.

(8) Seller shall not be liable for delay in shipping or loading the property covered by the Sales Memorandum due to causes beyond its control and without its fault or negligence, including without limitation, acts of God or the public enemy, acts or requests of any State or local governmental officer or agent purporting to act under authority, floods, fires, epidemics, quarantine restrictions, riots, sabotage, freight embargoes or failures, strikes, lock-outs and disputes with workmen.

(9) Seller reserves the right to cancel the contract of sale without liability in cases where purchaser is an agent for an undisclosed principal if such action is determined by the War Assets Administration in the public interest.

(10) No Member of, or Delegate to, Congress, or Resident Commissioner of the United States of America shall be admitted to any benefit that may arise therefrom unless it be made with a corporation for its general benefit.

(b) Qualified conditions of sale. In some instances these conditions of sale are modified to meet the needs of a particular sale or to meet the needs in the sale of a particular class of property. In the case of the sale of aircraft, sales are sold on an "as is, where-is" basis.

(c) Standard terms of sale. War Assets Administration reserves the following rights in connection with the sale of surplus property: (1) to reject any and all bids and offers; (2) to withdraw all or any part of the property included in the sale at any time prior to a contract of sale; and (3) to reserve the right to require a deposit.

(d) Submission to the Attorney General. In the case of any proposed disposal to private interests of personal property which cost the Government one million dollars or more a statement of such proposed disposal is submitted to

the Attorney General as required by Section 20 of the Surplus Property Act of 1944, as amended.

§ 8410.10 Methods of payment. Unless the property offered is salable on credit and the purchaser has made prior arrangements for the extension of credit, payment shall be made before the release of the property in U. S. coins and currency, money order, certified check, cashier's check, check issued by a recognized finance company, traveler's check, U. S. Government check, the purchaser's own check, or draft drawn under irrevocable letter of credit. Cashiers may accept uncertified checks of business enterprises in payment for merchandise purchased. Uncertified checks of individuals other than individuals operating a business, may be accepted for small amounts.

§ 8410.11 Credit. Credit may be granted to purchasers of surplus property: Provided, The property is to be used for business purposes including professional and agricultural enterprises and not for private use. The applicant for credit must provide credit information and references similar to those provided for any business credit transaction. The following credit terms have been extended:

(a) Open accounts. On open accounts, payment is generally required thirty (30) days after release of the goods by the War Assets Administration.

(b) Installment plan. Where purchase is of surplus property classified as durable, and the property is to be used in a business and not for resale, installment credit may be given. A down payment and periodic payments normally are required.

(c) Special credit arrangements. Special credit arrangements may be made if the purchaser's credit needs require such arrangements.

(d) Credit for site and similar sales. Credit arrangements, when desired, should be made prior to attendance of a special type of sale, such as site and spot sales.

(e) Other credit terms. Credit terms may be granted in the installment sales of aircraft and sales of machinery by dealer agents.

§ 8410.12 Insurance. Insurance coverage satisfactory to the Administra

tion is required upon all personal property leased or sold on a purchase money mortgage or installment basis. The cost of insurance is borne by the lessee or purchaser. Generally, open policies, which automatically attach at the time of sale and continue so long as the Government retains an unsatisfied interest in the property, are used. Insurance

coverage varies depending upon the method of the disposal transaction and the type of property involved as indicated below:

(a) Personal property other than motor vehicles or aircraft. Personal property other than motor vehicles or aircraft is insured against the perils of fire, lightning, windstorm, hail, explosion (except steam boiler or machinery explosion losses), aircraft or motor vehicle damage, smoke, riot, strike or civil commotion, vandalism and malicious mischief, collision or derailment of conveyance while in transit, earthquake and flood or water. If the property involved includes power plants or certain types of machinery, such as turbines, large fly wheels, etc., where an internal explosion factor is present, boiler or machinery explosion insurance on the conventional policy form is required in addition to the open policy coverage.

(b) Motor vehicles. Motor vehicles are insured against the exposures of fire, lightning, transportation perils, theft, windstorm, explosion, hail, earthquake, flood, riot or civil commotion, aircraft, and collision or upset ($50.00 deductible).

(c) Aircraft. The purchaser of aircraft is required to provide aircraft full insurance covering airplanes sold on an installment basis for a period of time not less than one (1) year. Coverage written on a component parts basis is not acceptable, unless that form applies only to the purchaser. Two methods of coverage are acceptable: (1) single interest coverage of the Government's interest under open policies obtained by War Assets Administration; and (2) dual interest coverage of the Government's and purchaser's interests obtained by the purchaser from underwriters acceptable to the Government.

§ 8410.13 Claims and adjustments. War Assets Administration may settle such claims or make such adjustments as may be permitted by and warranted under either express warranties or the

so-called "equitable adjustment clauses" contained in sales contracts. Such adjustments may be allowed in discharge of probable legal obligations and to satisfy equitable rights occasioned without fault of the buyer. All claims must be submitted in writing, by or on behalf of the original purchaser, to the regional office responsible for the sale, within the time specified in the sales contract.

§ 8410.14 Forms. Because of the variance in circumstances and conditions of each disposal, forms used for purchasing surplus personal property have not been standardized for all types of sales. Representative forms which have proved satisfactory in applicable cases, such as offers to purchase, priority certifications, and credit applications, as well as complete information on personal property disposal, may be obtained from any Wai Assets Administration office.

AUTHORITY: §§ 8411.1 to 8411.12, inclusive, issued under Pub. Law 404, 79th Cong., 60 Stat. 237; 5 U.S.C., Sup., 1001 et seq.

SOURCE: §§ 8411.1 to 8411.12, inclusive, contained in Operations Notice 4, Administrator, Aug. 28, 1946, effective Sept. 11, 1946, 11 F.R. 177A-758.

§ 8411.1 Scope. In disposing of surplus real property, the War Assets Administration performs a dual function: one function relates to the policy jurisdiction assigned under the Surplus Property Act of 1944, as amended and Executive Order 9689 in classifying and assigning surplus real property to the appropriate disposal agencies; and the other function relates to the disposal responsibilities of War Assets Administration as a designated disposal agency. This part outlines the procedures of War Assets

Administration solely as an agency designated for the disposal of surplus real_ property.

§ 8411.2 Types of surplus real property for which War Assets Administration is the disposal agency. Pursuant to the provisions of War Assets Administration Regulation 1, Part 8301 of this chapter, War Assets Administration is designated the disposal agency for the following types of surplus real property.

(a) All industrial real property (including buildings and fixtures and real property which is suitable and equipped for owning operations) and land which the Administrator shall determine is essential to the use of industrial plants, factories, and similar structures and facilities;

(b) Railroads, including land, trackage, rights of way, structures and equipment used or useful in connection therewith;

(c) Pipelines and facilities used for transporting petroleum products or gas;

(d) Airport property (including buildings and fixtures) and land which the Administrator shall determine is essential to the use of such property;

(e) Power plants and facilities, power transmission lines, and rights of way, and land which the Administrator shall determine is essential to the use of such property;

(f) All structures and improvements which are to be disposed of for removal off site by demolition or otherwise;

(g) Marine industrial real property, including buildings and fixtures, such as shipyards, ship repair yards and marine terminals; and

(h) Real property normally assigned to another disposal agency, when the Administrator shall determine that designation of War Assets Administration will facilitate the disposal of the property.

§ 8411.3 Classification. By the provisions of Part 8301 of this chapter and orders issued thereunder, all declarations of surplus real property are made to the Administrator. Each such declaration is screened and classified to determine the highest and best use of the property and the disposal agency or agencies to which the property is to be assigned.

§ 8411.4 Priority claimants. The Surplus Property Act of 1944, as amended, directs disposal agencies to grant a priority in the purchase of surplus real property to certain classes of purchasers. These classes of purchasers differ with the type of property being offered. The priority claimants and their status for each type of property under the disposal jurisdiction of War Assets Administration are as follows:

(a) Industrial and marine industrial real property. For industrial real property, including pipe-lines and facilities, railroads, and power plants and facilities and power transmission lines and rights of way, and marine industrial real property the sequence of priority is (1) Government agencies, (2) The Reconstruction Finance Corporation acquiring property for resale to purchasers which it considers to be small business under section 18 (e) of the Surplus Property Act of 1944, as amended, and (3) State or local governments.

(b) Airport property. For airport property the sequence of priority is (1) Government agencies, and (2) State and local governments.

(c) Non-industrial real property. When War Assets Administration is designated the disposal agency for any surplus non-industrial real property, it follows the sequence of priority set forth in section 23 of the Surplus Property Act of 1944, as amended, and Part 8305 of this chapter (Reg. 5, 11 F.R. 7611, 7969).

(d) Emergency housing. A special provision has been made to offer to Federal Public Housing Authority structures which may be suitable for emergency housing and which can be disposed of separately from the other realty.

§ 8411.5 Period allowed for exercise of priorities. The time allowed for the exercise of priorities varies for the different types of real property as follows:

(a) Industrial and marine industrial real property. A period of fifteen (15) days after the date on which priority notices are mailed, will be allowed for the exercise of a priority.

(b) Airport property. A period of thirty (30) days after the date on which priority notices are mailed will be allowed for the exercise of a priority.

(c) Non-industrial real property. The periods of time during which priority claimants wishing to acquire non-indus