By the overwhelming weight of authority a contractor may be relieved from a unilateral mistake in his bid by rescission under the proper circumstances. The prerequisites for obtaining such relief are: (1) the mistake is of such consequence that enforcement would be unconscionable; (2) the mistake must relate to the substance of the consideration; (3) the mistake must have occurred regardless of the exercise of ordinary care; (4) it must be possible to place the other party in status quo. It is also generally required that the bidder give prompt notification of the mistake and his intention to withdraw.
Plaintiff church invited bids for the construction of a music, education, and recreation building. The bids were to be accompanied by a bid bond. Defendant construction company submitted a bid and an insurer issued a bid bond. Defendant submitted the lowest bid, but later informed the church that there was an error. The church then entered into a contract with the second lowest bidder, and it demanded that the construction company and insurer compensate it under the bid bond. Defendant disclaimed such liability. The trial court held that neither party was entitled to summary judgment, and they both appealed.
Was defendant entitled to rescind the contract due to its unilateral mistake?
The court affirmed the finding that the church was not entitled to summary judgment, but reversed as to the defendant. Defendant had promptly notified the church of the mistake in calculating the amount of the bid. The church had actual knowledge of the mistake before it forwarded a contract to the construction company. The mistake did not amount to negligence preventing equitable relief, and it was material to the contract. Thus, the church should not have been permitted to take advantage of the mistake.