Thank You For Submiting Feedback!
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. This principle is applicable to a proposed subcontractor (promisor) who makes a bid, and with it an implied subsidiary promise to keep the bid open for a reasonable time after the awarding of the general contract, to a general contractor (promisee), who in turn bids on a construction contract with a third person in reliance upon the subcontractor's bid (and subsidiary promise) and is the successful bidder.
Plaintiff, Saliba-Kringlen Corporation, a general contractor on a freeway construction project, filed suit against defendant, Allen Engineering Co., an electrical subcontractor, after defendant refused to perform the work on a bid it was awarded on the grounds that the bid was erroneous. Plaintiff sought to recover the difference between defendant's bid and the amount charged by the replacement subcontractor. The trial court awarded plaintiff half of the claimed amount, and both parties sought review.
The court affirmed the judgment in favor of plaintiff, but modified it to award the full amount claimed. It held that plaintiff relied on defendant's bid to its detriment, that there was no evidence that its reliance was unreasonable, that plaintiff had no duty to seek to be relieved of its bid to the state made in reliance on defendant's bid, and that to avoid injustice, defendant's bid must be enforced. The court further held that the trial court had no basis to divide the loss between the parties and that plaintiff should be awarded the entire amount of the loss.