One who errs in preparing a bid for a public works contract is entitled to the equitable relief of rescission if he can establish the following conditions: (1) the mistake is material; (2) enforcement of a contract pursuant to the terms of the erroneous bid would be unconscionable; (3) the mistake did not result from violation of a positive legal duty or from culpable negligence; (4) the party to whom the bid is submitted will not be prejudiced except by the loss of his bargain; and (5) prompt notice of the error is given.
Respondent construction company submitted a bid proposal to appellant, accompanied by a bid bond, which contained a promise to pay the difference between the bid and the next higher bid if respondent refused to enter into a contract with appellant. Shortly after the bids were opened, respondent notified appellant that its bid contained an error, the omission of an item constituting 14% of the total bid. Appellant contracted with a higher bidder, sought to collect on respondent's bond, and challenged the trial court's granting of the equitable remedy of rescission.
Was the error of the respondent material in the contract allowing rescission?
The judgment of rescission was affirmed as the respondent's material mistake resulted from a clerical oversight, appellant was promptly notified of the mistake, and enforcement would have resulted in a substantial hardship to respondent. In affirming the lower court's ruling, the court concluded that the error was material, resulted from a clerical oversight, and was promptly communicated to appellant. Appellant suffered no prejudice as a result, and enforcement would constitute a substantial hardship on respondent; therefore, rescission was appropriate.