Masonry Magazine September 1964 Page. 23
The Law of Contracts In Relation to Mason Contractors
(continued from page 11)
"Consideration" here means buying an option, making a contract (conditional on the award, of course), or employing some other binding legal device. Absent such consideration, he has no legal remedy.
The leading case of a general contractor attempting to hold the subcontractor to his bid is, James Baird Co. v. Gimbel Bros., Inc., 64 F. 2d 344, C.A. 2d (1933). The subcontractor, Gimbel Bros., sent a bid based on a mistaken estimate to Baird Co., offering to supply all the materials required by the specifications. The general used the bid in submitting its bid to the owner. Gimbel Bros. then withdrew their offer before Baird Co. formally accepted it. Needless to say, Baird Co.'s bid was accepted by the owner, and Gimbel Bros. refused to honor their bid. Baird Co. then sued for the difference between Gimbel Bro.'s bid and what Baird Co. had to pay another supplier to furnish materials. The court dismissed the complaint on the ground that Gimbel Bros. withdrew their bid before it was accepted, and stated that it was "entirely clear that the contractor did not suppose that he accepted the subcontractor's offer by merely putting in his bid."
In a virtually identical fact situation, the opposite result was achieved by using the doctrine of promissory estoppel. To recover, the contractor had to establish the four essential elements of promissory estoppel, (1) that there was in fact a bid, (2) that the subcontractor should reasonably have expected the bid to have produced action of a definite and substantial character, (3) that the bid would induce such action, and (4) finally, that injustice can be avoided only by the enforcement of the promise.
It should be stressed that in this case, it was not the bid or offer itself that was enforced. Rather, the court found an implication of law, a subsidiary promise not to revoke the bid. It was the enforcement of this promise which made the bid irrevocable.
It should be noted that in both of these case, the contractor could have protected his position by applying the conventional contract theory. The parties could have entered a bilateral agreement conditioned upon the acceptance of the general's bid. In the alternative, an option could have been secured holding open the subcontractor's bid, the consideration for such option being the contractor's detriment in limting himself to the use of that bid in computing the general bid, or the contractor could have required the subcontractor to put up a bid bond.
The foregoing discussion suggests just a few of the problems that you may encounter in construction contracts. I cannot reiterate too often that only way in (continued on page 24)
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MASONRY September, 1964
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