Drennan v. Star Paving Co.

Brief Fact Summary. Plaintiff received a bid from Defendant that was used in compiling a bid. Plaintiff was awarded the work and is suing to enforce Defendant’s bid.

Synopsis of Rule of Law. A general contractor may enforce a subcontractor’s bid where there is reasonable detrimental reliance under a theory of promissory estoppel.

Facts. Plaintiff received a bid from Defendant for paving. Based on Defendant’s bid for the paving work, Plaintiff compiled and submitted a bid for the job. Plaintiff was awarded the job. The day after Plaintiff was awarded the job, Plaintiff stopped by the Defendant’s office. Defendant told Plaintiff that a mistake had been made and the paving could not be done for the price indicated in Defendant’s bid.

Issue. Can Plaintiff enforce Defendant’s bid?
Can Plaintiff enforce Defendant’s bid as a contract?
Can Plaintiff enforce Defendant’s bid based on promissory estoppel?

Held. Yes. Plaintiff can enforce Defendant’s bid based on promissory estoppel, but not as a contract.
A general contractor cannot enforce a subcontractor’s bid as a bilateral contract or an option contract when there is no consideration.
A general contractor may enforce a subcontractor’s bid where reasonable detrimental reliance makes the offer (bid) binding. In this case, Plaintiff did not bargain for the use of Defendant’s bid. However, it was reasonable for Plaintiff to rely on Defendant’s bid in creating the bid Plaintiff submitted. In addition, Defendant’s submission of a bid was motivated by furthering its own business and Defendant’s business would only be furthered if the general contractor were awarded the job and gave the paving work to Defendant. In other words, Defendant submitted the bid to Plaintiff because Defendant wanted Plaintiff to use the bid in compiling a bid for the job.
The Court notes that had Defendant’s mistake been so obvious as to be known to Plaintiff, Plaintiff’s reliance would not have been reasonable and the bid would not be enforceable under promissory estoppel. However, under these facts, the Court does not find Plaintiff’s reliance unreasonable.
The Court also rejects Defendant’s contention that Plaintiff failed to mitigate damages. Plaintiff reasonably mitigated damages by seeking other bids from subcontractors for the paving work and accepting the lowest bid.

Discussion. While a general contractor cannot enforce a subcontractor’s bid as a contract, the bid may be enforce under promissory estoppel. To enforce a subcontractor’s bid under promissory estoppel, the general contractor’s reliance on the bid must be reasonable.