Brief Fact Summary. The Plaintiff, Boise Junior College District (Plaintiff), brought suit against the Defendant, Mattefs Construction Co. (Defendant) in an attempt to collect on a bid bond.
Synopsis of Rule of Law. Rescission is an equitable remedy when both parties enter into a contract under a mutual mistake.
Further, the court noted the city had ample time to award the contract to another bidder without readvertising, and the city will not be heard to complain that it cannot be placed in statu quo because it will not have the benefit of an inequitable bargain.View Full Point of Law
Issue. This case considers whether rescission is available when there is a mutual material mistake in the negotiation process.
While the Court did affirm that Defendant would be allowed to rescind, it did so by considering the conditions of the contract. The court found that Defendant, in preparing a bid for a public works contract was allowed rescission, if he could prove (1) that his mistake was material; (2) that enforcement of a contract pursuant to the terms of the bad bid would be considered unconscionable; (3) that the mistake was made in good faith; (4) that the Plaintiff would not be prejudiced by the loss of the deal and (5) prompt notice of the error was given.
In this case, each of these elements can be outlined as follows: (1) Defendant’s mistake was material, in that it went to the essence of the contract (evidenced by the fact that the discrepancy was almost a 14% error); (2) because Defendant would suffer an economic loss, enforcing the bid was unconscionable insofar as it created a burden; (3) clerical errors are always considered good faith mistakes, unless proven otherwise; (4) the Plaintiff couldn’t prove any hardship, in that it had assumed it would be paying $150,000 and the bid it ended up using was $149,000 and (5) Defendant gave notice of his error as soon as he realized a mistake was made.
Discussion. This is considered a mutual mistake case because the clerical error led both sides to believe they were entering into a contract that was different than it really was.