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Law School Case Brief

Elsinore Union Elementary Sch. Dist. v. Kastorff - 54 Cal. 2d 380, 6 Cal. Rptr. 1, 353 P.2d 713 (1960)

Rule:

Rescission may be had for mistake of fact if the mistake is material to the contract and was not the result of neglect of a legal duty, if enforcement of the contract as made would be unconscionable, and if the other party can be placed in status quo. In addition, the party seeking relief must give prompt notice of his election to rescind and must restore or offer to restore to the other party everything of value which he has received under the contract.

Facts:

Defendants, a building contractor and his surety, appealed from a judgment for plaintiff school district in the district action to recover damages allegedly resulting from defendant contractor's failure to perform a contract after his low bid was accepted. Despite testimony of defendant contractor and the testimony of plaintiff's architect and superintendent that there was an honest clerical error in compiling the bid, the trial court held that it would not be inequitable or unjust to require performance of the contract. The court therefore awarded damages to plaintiff. 

Issue:

Was the contractor liable for a mistaken bid based on a clerical error?

Answer:

No

Conclusion:

The appellate court reversed the judgment, holding that it would be unconscionable to hold defendant contractor to his bid at the mistaken figure. The court held that, because of the clerical error and defendant contractor's subsequent prompt rescission, he was not obliged to perform the contract. It has been recognized numerous times that not all carelessness constitutes a "neglect of legal duty" within the meaning of the section. On facts very similar to those in the present case, courts of other jurisdictions have stated that there was no culpable negligence and have granted relief from erroneous bids. The type of error here involved is one which will sometimes occur in the conduct of reasonable and cautious businessmen, and, under all the circumstances,  we cannot say as a matter of law that it constituted a neglect of legal duty such as would bar the right to equitable relief.

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