Brief Fact Summary. Star Paving Co. (Defendant) submitted a bid to Plaintiff, a general contractor, for a paving job. Plaintiff submitted his bid, which was calculated by using Defendant’s bid to the government. Defendant then said that his bid had been a mistake and he would need more money to do the job.
Synopsis of Rule of Law. The offer of a subcontractor is irrevocable before it is accepted.
Section 90 of the Restatement of Contracts states: A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.View Full Point of Law
Issue. Is Defendant liable for the extra cost incurred by Plaintiff due to Defendant’s mistake?
Defendant knew that Plaintiff would use Defendant’s bid in calculating his own bid.
Because of Defendant’s reliance on the bid, the fact that the offer was not accepted as such does not matter.
Discussion. The issue of reliance is most crucial here, and the special circumstances involved in general contractors and subcontractors. Bids are irrevocable before they are accepted.