Drennan v. Star Paving Co.
51 Cal.2d 409, 333 P.2d 757 (Cal. 1958)
a licensed general contractor, was preparing a bid on the "Monte
Vista School" in California.It was customary in that area for general contractors to receive
the bids of subcontractors by telephone on the day of bidding and to rely
upon these bids in computing their own bids.Star Paving placed the lowest bid for paving work
computed his own bid accordingly and submitted it with the name of the
Star Paving as the subcontractor for paving.When the bids were opened, Drennan's bid was lowest and
he was awarded the contract.
next morning, Drennan stopped at Star Paving's office.He was immediately told that the
bid placed by Star Paving was a mistake. Star Paving refused to do the
paving work for less than $15,000.
several months of soliciting bids from other subcontractors, Drennan was
able to find another subcontractor who could do the paving work for
$10,948.60. Drennan sued for $3,817 (the difference between Star Paving's
bid and the cost of the paving to Drennan) plus court costs.
Paving argued there was no enforceable contract between the parties
because the offer was revocable and it was revoked before Drennan
communicated his acceptance to Star Paving.
was no evidence that the defendant offered to make his bid irrevocable
in exchange for the plaintiff's use of its figures in computing his
Trial Court found for Drennan and awarded $3,817 in damages.Star Paving appealed.
Appellate Court affirmed.
Court found that there was neither an option supported by consideration, not a bilateral contract binding on both parties.
Court found that the Star Paving reasonably induced reliance on the part of the Drennan.
you make a promise that you should reasonably expect will cause the
promisee to act in reliance to their detriment, and it actually does
cause them to act, then you may be bound to that promise if necessary to
avoid injustice. (aka the doctrine of promissory estoppel)
loss resulting from the mistake should fall on the party who caused it."
Rule is that, held implicit in the
subcontractor's bid, is a subsidiary promise to keep the bid open for a
reasonable time after award of the prime contract to give the general
contractor an opportunity to accept the offer on which he relied in
computing the prime bid.
that the general contractor is not bound by any promise to the
decision is in opposition to the decision in James Baird Co. v. Gimbel
Bros. (64 F.2d 344 (2nd Cir. 1933)), decided 20 years earlier. This case helped establish that reliance
(aka promissory estoppel) is a
reasonable way to make an offer irrevocable.