Court Opinion

ID: 9628277
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:15:45.93183+00
Date Added: 2024-06-11T18:07:02.662078
License: Public Domain

Prager, J.,
dissenting. I respectfully dissent. The majority has chosen to adopt a minority position in holding that one who makes a unilateral mistake in bidding on a construction contract is precluded in all cases from seeking equitable relief by way of rescission. Jones, The Law of Mistaken Bids, 48 Cin. L. Rev. 43 (1979). The basis of the court’s decision is the fear that to hold otherwise would undermine the integrity of the bidding system. The opinion makes it clear that the bid contract, not the construction contract, is what is being enforced.
Most jurisdictions allow relief by rescission from a unilateral mistake in the bid situation when the following criteria are met:
1. The bidder has acted honestly, in good faith, and without gross or willful negligence;
2. The bidder was reasonably prompt in notifying the contracting party of the error;
3. The mistake pertained to a material part of the contract;
4. The mistake was of such magnitude that enforcement or forfeiture would be unconscionable;
*6305. Relief would return the parties to the status quo without prejudice to the contracting party; and
6. Evidence is presented which convincingly establishes the mistake in fact exists.
M.F. Kemper Const. Co. v. City of L.A., 37 Cal. 2d 696, 235 P.2d 7 (1951); J. T. Taylor & Sons v. Ar. Ind. Sch. Dis., 160 Tex. 617, 335 S.W.2d 371 (I960); Baltimore v. DeLuca-Davis Co., 210 Md. 518, 124 A.2d 557 (1956); 13 Williston on Contracts § 1578, at p. 507 (3rd ed. 1970).
Some courts distinguish the bid bond from the performance bond and deny relief when the issue is forfeiture of the bid bond posted as liquidated damages for failure to enter into the awarded contract. See, e.g., Trvlrs. Indm. Co., Aplnt. v. Susqha. Co. Com., 17 Pa. Commw. Ct. 209, 331 A.2d 918 (1975); Board v. S-W Co., 22 Ohio St. 2d 107, 258 N.E.2d 605 (1970). The vast majority of the jurisdictions, however, allow relief from forfeiture in bid bond cases when the accepting party knew or should have known of the errpr before acceptance, as when the party has been specifically notified or the price disparity indicates probable error. Balaban-Gordon v. Brighton Sewer Dist., 67 Misc, 2d 76, 323 N.Y.S. 724 (1971); Baltimore v. DeLuca-Davis Co., 210 Md. 518; M. F. Kemper Const. Co. v. City of L.A., 37 Cal. 2d 696; 13 Williston on Contracts § 1573 (3rd ed. 1970); Restatement of Restitution § 12 (1937 Supp.); 2 Palmer’s Law of Restitution § 12.20, at p. 687 (1978); 64 Am. Jur. 2d, Public Works and Contracts § 84, at p. 945.
In the case before us, the six criteria for rescission of the contract are present. The findings of the district court justify rescission of the bid bond in this case. Defendant was notified of Triple A’s error before acceptance, and was able to award the contract to the next lowest bidder without readvertising. Defendant was not prejudiced by the withdrawal of the bid and had no change of position. Plaintiff should not be subjected to a $40,000 loss because a young man made an innocent mistake in transferring the calculated amount of shot rock from the adding machine tape to the bid project estimate sheets. The purpose of rescission is to prevent unjust enrichment. To unjustly enrich defendant by-allowing enforcement of the bid bond in this case is unfair, unjust, and grossly inequitable.
Accordingly, I dissent.
Miller, J., joins the foregoing dissenting opinion.