Sec. 21.06.08.01. Inspection

A. Right to Inspect. The procurement agency may, before payment or acceptance, inspect at the time and the place of delivery labor performed or goods delivered pursuant to the contract.

B. Right to Reject and Notice of Rejection.

(1) The procurement agency shall inform the contractor of rejection of labor or goods within a reasonable time after delivery. The contractor shall be responsible for the labor or goods so rejected and any expenses once a rejection occurs. The procurement agency shall assume no responsibility for rejected labor or goods. After inspection, the procurement agency may, at its option:

(a) Return rejected goods to the contractor and forward along with the damaged goods the consignee's copy of the bill, if any, and the inspection report;

(b) Request removal of the goods; or

(c) Reject labor performed.

(2) If the contractor fails to remove rejected items from the using agency's premises within a reasonable time, the procurement agency may take any action it deems appropriate, including but not limited to:

(a) Store the items at the contractor's expense;

(b) Reship them to the contractor and charge his account;

(c) Resell the items and retain a reasonable amount for its expenses.

C. Revocation of Acceptance.

(1) The procurement agency may revoke its acceptance of any labor or goods:

(a) That do not conform to the contract and that non-conformity reasonably impairs their value; or

(b) The acceptance of which assumed that the non-conformity would be cured within a reasonable time and this has not been accomplished.

(2) A revocation of acceptance shall constitute a rejection. The procurement agency shall send the contractor notification of revocation of acceptance within a reasonable time. The contractor shall deliver to the procurement agency instructions for the return of the items. The procurement agency may, if the contractor fails to provide shipping instructions, take any action it deems appropriate, including but not limited to:

(a) Store the items at the contractor's expense;

(b) Reship the items at contractor's expense;

(c) Resell the items and retain a reasonable amount from the sale price to cover its expenses.

D. Risk of Loss.

(1) If the contract requires or authorizes the contractor to ship the items by a particular carrier, and requires delivery only to the carrier, then the risk of loss passes to the procurement agency when conforming goods are duly delivered to the carrier.

(2) If the contract requires the contractor to deliver the items to a particular destination, and conforming items are so delivered, the risk of loss passes to the procurement agency only upon the arrival of the items at that destination.

E. Reservation of Rights. Nothing contained in this chapter shall be construed in any way to limit the rights of the State under any law, including the Commercial Law Article, which may be applicable to any transaction governed by these regulations.