SKB Industries, Inc. v. Insite

Brief Fact Summary. Beers Construction Company, a general contractor, was accepting bids for hardscaping/landscaping work in connection with the 1996 Summer Olympic Games in Atlanta. Insite, a sub-contractor was preparing a bid for the work and accepting quotes for the landscaping portion of the project. SKB Industries, Inc. (SKB) prepared a bid to do the landscaping, which was significantly lower than all others

Synopsis of Rule of Law. This case outlines the rule of Promissory Estoppel and the four elements required in order to prove detrimental reliance: (1) A promise was made; (2) The promisor should have reasonably expected the promisee to rely on its promise; (3) The promisee did rely, to its detriment and (4) Injustice can only be avoided by either (a) enforcing the promise, or (b) rewarding reliance damages in an amount sufficient to put the promisee back in the position it was in, prior to the making of the promise.

Facts. After some deliberation, the parties realized that SKB was relying on using cheaper materials than the plan called for and the parties were allowed to revise their bids. Insite revised its bid to encompass the higher costing materials, but SKB did not agree to the final project and refused to do the landscaping.
SKB contended that it was not subject to a binding agreement because it did not agree to the final bid as it stood and that Insite was aware that SKB had initially intended to use less expensive materials. After Insite took on the landscaping on its own, SKB later agreed to do partial landscaping, but put in their agreement that it they would not agree to do the full landscaping job. After the project was complete, Insite brought suit for reliance damages, based on the concept of promissory estoppel. The trial court allowed Insite to pursue this claim, and SKB appealed.

Issue. This case considers whether promissory estoppel is available as a remedy after the parties enter into a subsequent contractual arrangement.

Held. Affirmed.
The court found in SKB’s refusal to sign off on the new bid that there was no binding contract between the parties, but that Insite had relied on SKB’s initial quotation in formulating and eventually winning its bid.
SKB later argued that because they performed work pursuant to a subsequent agreement, the original agreement was moot by the mere existence of the subsequent agreement. The court found that, if SKB had signed off on a later agreement to do the original work, this argument would hold true. However, because SKB specifically excluded the original work, they could not rely on their ongoing business relationship to vitiate the prior agreement. Thus Insite was able to prevail on the theory of promissory estoppel, because SKB could not show how they had not relied on their original quotation in formulating and winning the bid.

Discussion. Promissory Estoppel is not vitiated by a subsequent agreement unless that agreement encompasses the original promise as between the parties. In this case, SKB tried to use their subsequent working relationship as a tool to void their early agreement with Insite. This, however, was no affective, because SKB was never able to show that Insite stopped relying on their original quotation.