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Author Topic: Contracts hypo  (Read 2038 times)

Jumboshrimps

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Contracts hypo
« on: December 03, 2005, 07:12:47 PM »
GenCo places an ad in the paper seeking a company to do the electrical wiring in the Metropolitan Public Library, a project which GenCo intends to bid on. SubCo sends GenCo a bid of one million dollars to do the wiring. GenCo uses this bid in making its bid to the Metropolitan Library, which then awards the contract to GenCo. Subco then realizes that it made a clerical mistake and cannot do the wiring for less that two million. SubCo tells GenCo of the error and says it will do the job for no less than two million.

1) Assuming GenCo never sent a written acceptance to SubCo, is there an enforceable contract between GenCo and SubCo?

2) If SubCo performs the wiring work competently, is forced to sue GenCo for payment, and loses the suit due to inept lawyering, will a claim of unjust enrichment prevail against Metropolitan?

celarkobri

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Re: Contracts hypo
« Reply #1 on: December 03, 2005, 08:38:38 PM »
1) Since it's a K for services (act wiring, not just for wires) it doesn't fall under the statute of frauds. However, GenCo's ad wasn't an offer so Sub's bid wasn't an acceptance, it was an offer. It doesn't say if Gen told Sub Co it was using it's bid for it's bid to Met., but maybe we can assume that standard business practices say that a submission for a subcontracting bid is assumed to be used for a contracting bid. In that case, Sub should have known that Gen will rely on Sub's offer.

However, if Gen didn't tell Sub that it had accepted it's bid before Sub revoked, then the revocation is probably proper, as an offeror can revoke any time before acceptance.

If Sub's bid was way out of proportion to the rest of the bids, then that should have been a clue that there was an error and Gen should not have relied on the bid. But if the average range of bids would have included $1m then Gen would have no idea that Sub's bid was in error.

For promissory estoppel, Gen would have to show that there was an injustice done to him in that he will now lose money on the K with Met. It's all starting to get fuzzy for me now, but I think that if Gen could find another contractor who would perform for the same price, or about the same price, than the injustice has been fixed and Gen can't get prom. estop.

As to your second question, we didn't really do much on unjust enrichment so I'd really have to conjecture on that one. I'm not sure how Sub could sue Met., especially if it can't prove its case againt Gen.

colforbin

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Re: Contracts hypo
« Reply #2 on: December 03, 2005, 09:14:27 PM »
I believe this has similar facts tot he Drennan case where a contractor wins using a subcontractor's bid that he finds out afterwards is off by a couple of thousand. The Contractor than sued the sub for performance or the difference between what he had to pay and what the sub's bid was. Don't think there could be a claim for unilateral mistake Rest. 2nd 153 & 154.

WobbleWobbleWobble

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Re: Contracts hypo
« Reply #3 on: December 03, 2005, 09:19:45 PM »
Traynor would say that the sub's bid is irrevocable based on promissory estoppel

colforbin

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Re: Contracts hypo
« Reply #4 on: December 03, 2005, 09:20:32 PM »
In Drennan v. Star Paving, the court found that the Sub's estimate was in fact an offer. Additionally, the court found that there was no evidence that the Sub made it's bid irrevocable; or that the General Contractor's use of the estimate in his bid constituted acceptance. There was no contract; however, the General Contractor relied on the bid to his detriment. It is a surefire Rest 2nd 90, Promissory Estoppel Application.

colforbin

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Re: Contracts hypo
« Reply #5 on: December 03, 2005, 09:28:30 PM »
The Subs bid would not be irrevocable based on promissory estoppel; however, we could look to the Rest. 2nd 45, where in the comments it states that "part of a requested performance is given, the offeror will not revoke his offer,". If the court found that the offer was irrevocable, there would be no need for promissory estoppel, because the contract would be valid and enforceable.

Here there are two different things. If the offer is irrevocable, then there is a valid contract.
On the other hand if the court utilizes promissory estoppel,it is because there is no contract, and therefore, promissory estoppel is employed based on the other parties reliance.


celarkobri

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Re: Contracts hypo
« Reply #6 on: December 03, 2005, 09:32:16 PM »
The Subs bid would not be irrevocable based on promissory estoppel; however, we could look to the Rest. 2nd 45, where in the comments it states that "part of a requested performance is given, the offeror will not revoke his offer,". If the court found that the offer was irrevocable, there would be no need for promissory estoppel, because the contract would be valid and enforceable.

Here there are two different things. If the offer is irrevocable, then there is a valid contract.
On the other hand if the court utilizes promissory estoppel,it is because there is no contract, and therefore, promissory estoppel is employed based on the other parties reliance.



but if it's a K then there must have been acceptance.

colforbin

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Re: Contracts hypo
« Reply #7 on: December 03, 2005, 09:37:55 PM »
Well, I'm not really arguing that angle. I'm just stating that the court could interpret the General Contractors use of the Sub's estimate in his bid package as acceptance. The court in Drennan didn't really elaborate on that because the promissory estoppel claim was a home run. It merely stated it as a possibility.

WobbleWobbleWobble

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Re: Contracts hypo
« Reply #8 on: December 03, 2005, 09:38:35 PM »
i improperly used the term "irrevocable"

colforbin

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Re: Contracts hypo
« Reply #9 on: December 03, 2005, 09:49:19 PM »
Now I'm not sure if that makes sense. Promissory estoppel wouldn't have anything to do with revocability in any capacity. It strictly is employed to "estopp" one party from stating that their isn't a contract because the other party relied.
I guess you could look at it as saying that promissory estoppel can "estopp" the Sub from saying his bid was revocable. Does that make sense?