Brief Fact Summary.
Defendant made the winning bid for Plaintiff’s construction project. Due to a unilateral mistake, Defendant attempted to withdraw the bid. Plaintiff the accepted the second lowest bid and sued Defendant for a $93,000 bid bond. The trial court denied both parties’ motions for summary judgment, but certified the issue for immediate appeal.
Synopsis of Rule of Law.
The principles of equity allow a contract to be rescinded upon a unilateral mistake where it would be unconscionable to enforce the contract.
First Baptist Church of Moultrie (Plaintiff) was soliciting bids for a construction project. Each bid had to be accompanied by a bid bond amounting to 5% of the bid. Barber Contracting Company (Defendant) submitted a bid for $1,860,000 with a 5% bond of $93,000. Plaintiff awarded Defendant the contract on May 15, 1986. On May 16, 1986, Defendant informed Plaintiff that Defendant had made a mistake in calculating the bid and the cost was actually $143,120 higher. On May 20, 1986, Defendant attempted to withdraw the bid. On May 29, 1986, Plaintiff mailed Defendant a contract based on the original bid price and Defendant refused to sign it. Plaintiff then accepted the second lowest bidder at a price of $1,919,272 and sued Defendant for the $93,000 bid bond. Plaintiff and Defendant filed motions for summary judgment and the trial court denied both of them, but certified the issue for immediate appeal.
Whether the principles of equity allow a contract to be rescinded upon a unilateral mistake where it would be unconscionable to enforce the contract.
Yes. The trial court properly denied Plaintiff’s motion for summary judgment, but erred in denying Defendant’s motion for summary judgment. The principles of equity allow a contract to be rescinded upon a unilateral mistake where it would be unconscionable to enforce the contract.
It is also generally required that the bidder give prompt notification of the mistake and his intention to withdraw.View Full Point of Law
It is generally accepted principle that a contract can be rescinded upon a party’s unilateral mistake where it would be unconscionable to enforce the contract. This is because it would be unfair to allow the other party to profit based on a mistake. The mistaken party is required to give prompt notice of their intention to withdraw the bid. However, if the mistake is a result of negligence, relief can only be obtained where the other party would not be prejudiced by rescission. Here, Defendant’s mistake amounts to 7% of the total bid and Defendant promptly notified Plaintiff of Defendant’s mistake and intention to withdraw the bid. Enforcement of the contract would allow Plaintiff to unjustly profit at Defendant’s mistake. Additionally, the error was not a result of negligence and even if it were, Plaintiff would not be prejudiced because Plaintiff only lost an artificially low bid that it would be unfair to enforce. Therefore, rescission is proper.