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Drennan v. Star Paving Co. - 51 Cal. 2d 409, 333 P.2d 757 (1958)

Rule:

A promise, which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.

Facts:

Plaintiff filed an action to recover damages caused by defendant's refusal to perform certain paving work according to the bid it submitted to plaintiff. Plaintiff, a licensed general contractor, was preparing a bid on the "Monte Vista School Job" in the Lancaster school district. Bids had to be submitted before 8 p.m. Plaintiff testified that it was customary in that area for general contractors to receive the bids of subcontractors by telephone on the day set for bidding and to rely on them in computing their own bids. Thus, on that day plaintiff's secretary, Mrs. Johnson, received by telephone between 50 and 75 subcontractors' bids for various parts of the school job. As each bid came in, she wrote it on a special form, which she brought into plaintiff's office. He then posted it on a master cost sheet setting forth the names and bids of all subcontractors. His own bid had to include the names of subcontractors who were to perform one-half of one percent or more of the construction work, and he had also to provide a bidder's bond of 10 percent of his total bid of $317,385 as a guarantee that he would enter the contract if awarded the work. Late in the afternoon, Mrs. Johnson had a telephone conversation with Kenneth R. Hoon, an estimator for defendant. He gave his name and telephone number and stated that he was bidding for defendant for the paving work at the Monte Vista School according to plans and specifications and that his bid was $7,131.60. At Mrs. Johnson's request, he repeated his bid. Defendant's was the lowest bid for the paving. Plaintiff computed his own bid accordingly and submitted it with the name of defendant as the subcontractor for the paving. When the bids were opened, plaintiff's proved to be the lowest, and he was awarded the contract. On his way to Los Angeles the next morning, plaintiff stopped at defendant's office. After introducing himself, defendant immediately told him that they had made a mistake in their bid and  could not do it. Plaintiff told defendant that he would expect him to carry through with their original bid because Plaintiff had used it in compiling his bid and the job had been awarded to him. Defendant refused to do the paving work for less than $15,000. The trial court found on substantial evidence that defendant made a definite offer to do the paving on the Monte Vista job according to the plans and specifications for $7,131.60, and that plaintiff relied on defendant's bid in computing his own bid for the school job and naming defendant therein as the subcontractor for the paving work. Accordingly, it entered judgment for plaintiff in the amount of $3,817 (the difference between defendant's bid and the cost of the paving to plaintiff) plus costs. The defendant contended that there was no enforceable contract between the parties on the ground that it made a revocable offer and revoked it before plaintiff communicated his acceptance to defendant.

Issue:

Was the contract enforceable?

Answer:

Yes

Conclusion:

The court affirmed the trial court's judgment. The court affirmed the award of damages to plaintiff, since the loss resulting from any mistake fell upon the party who caused it. Plaintiff had no reason to believe that defendant's bid was in error and plaintiff was entitled to rely upon it.

 

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