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New England Insulation Co. v. Gen. Dynamics Corp. - 26 Mass. App. Ct. 28, 522 N.E.2d 997 (1988)

Rule:

Requests for bids are usually nonbinding invitations for offers. If the contracting authorities knew from the beginning they were going to give a certain company the contract and the advertisement for bids was a sham, they practiced a fraud on plaintiff and on all other innocent bidders. They induced them to spend their money to prepare their bids on the false representation that their bids would be honestly considered. This implied contract has been broken and the plaintiff may maintain an action for damages for its breach. The misrepresentation cases involving bidding also arise primarily in the public sector, but there seems to be no reason in principle why they should not apply to private contractors.

Facts:

Defendant General Dynamics Corporation invited the bidder, plaintiff New England Insulation Co. to submit a bid for certain work. In its solicitation, General Dynamics promised to keep the bid secret until the end of the bidding process. New England subsequently learned that General Dynamics shared its bid with another company and thereafter, accepted the bid of that company. New England filed an action against General Dynamics for breach of an implied contact and misrepresentation in the bidding process. The trial court dismissed the action for failure to state a claim. Plaintiff appealed.

Issue:

Was the defendant’s promise not to disclose binding?

Answer:

Yes

Conclusion:

The court reversed the order of the trial court, which had dismissed the bidder's complaint against General Dynamics  for breach of contract and misrepresentation, and remanded the cause for further proceedings. The appellate court held that the corporation's promise to the bidder not to disclose the bid might have been binding. A generous reading of the bidder's complaint, therefore, barred dismissal. Further, the misrepresentation policies enunciated in public contract cases also applied to the private sector.

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