Subcontractor Bid Withdrawal and the Reliance Option
Ridgeline Builders is preparing a bid for a municipal library renovation, with bids due at 2:00 p.m. Friday. On Wednesday, Ridgeline solicits quotes from electrical subcontractors. Volta Electric submits a quote of $184,000 for the electrical package. Ridgeline's estimator notices the figure is roughly 20 percent below the other three quotes but does not call to verify. On Thursday evening, Ridgeline inserts Volta's number into its general bid and submits $4.2 million, the lowest received. On Friday at 9:00 a.m., Volta's owner calls to say the quote omitted $60,000 of switchgear and was a clerical error; Volta refuses to perform at $184,000. Ridgeline wins the contract and must now hire another electrical subcontractor for $238,000. Volta signed nothing, received no payment, and never made any express promise to keep the quote open.
1. Volta argues there was no contract because Ridgeline never formally accepted its quote before Volta revoked. Is Volta correct?
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Probably not, and the reasoning matters more than the label.
- Offer: A detailed subcontractor quote is an offer, not a mere invitation to deal. It is definite enough as to price, scope, and time.
- No option by consideration: Volta gave no consideration, so the quote was revocable in principle.
- Option by reliance: Restatement (Second) of Contracts § 87(2) and the Drennan v. Star Paving line treat the offer as irrevocable to the extent necessary to avoid injustice once the general contractor has relied on it in a bid that cannot be withdrawn. Acceptance is effected by that reliance, not by a telegram.
Ridgeline must show a definite offer, reliance that was reasonable and foreseeable, and injustice if the quote is withdrawn. Volta's revocation arrived after the reliance, so it is ineffective for the prime bid. Volta's best counter is that a 20 percent gap made reliance unreasonable-but a general contractor is not obliged to audit every quote, and the gap was equally an argument that Volta's price was competitive.
2. Can Volta avoid the deal on the ground that its quote contained a clerical error?
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Only narrowly. A unilateral mistake is not a general escape hatch.
Under Restatement § 153, the mistaken party may avoid if the mistake is material and enforcement would be unconscionable, or if the other party had reason to know of the mistake (§ 154). Volta's $60,000 omission is material, and the 20 percent gap is evidence that Ridgeline's estimator had reason to know. That gives Volta a real equity argument for rescission.
But rescission usually must yield to the reliance interest. Courts applying the Drennan rationale often refuse full avoidance and instead protect the general contractor's reliance. The two realistic outcomes are:
- Reformation or rescission plus a reliance award to Ridgeline; or
- Enforcement at $184,000, with Volta bearing its own pricing error.
A scrivener's-error reformation claim would need a signed writing showing the true intent; there is none here. Volta's position is strongest only if it can show Ridgeline's estimator actually knew the number was wrong.
3. Assuming Volta is bound, how should Ridgeline's damages be measured, and what must it prove?
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Expectation damages put Ridgeline where performance would have left it:
- Cover price minus contract price: $238,000 − $184,000 = $54,000.
Ridgeline must prove:
- Causation - the replacement subcontract was a reasonable substitute, not a gold-plated upgrade.
- Certainty - a documented quote or signed subcontract, not an estimate.
- Foreseeability - price risk is exactly what the bidding process contemplates; Volta knew its number would go into a prime bid.
- Mitigation - Ridgeline solicited replacement quotes and did not sit on the breach.
If Volta wins rescission, recovery shrinks to the reliance interest: bid preparation costs and any delay costs actually incurred. Consequential damages (liquidated delay penalties on the library project) are recoverable only if Volta knew of them when it quoted. Ridgeline cannot recover both the $54,000 and its lost profit on the prime contract.