Contracts & ExecutionQuestion 172 of 1632

A contractor discovers a $20,000 arithmetic error in its bid one hour after submitting it, before any contract is signed. The contractor's BEST course of action is to:

a.Sign the contract anyway and absorb the $20,000 loss in silence
b.Notify the owner in writing at once and ask to withdraw the bid
c.Sign, then substitute cheaper materials to make up the shortfall
d.Say nothing, since a bid cannot be withdrawn after submission

Explanation

Civil Code §1586 lets a proposal be revoked at any time before its acceptance is communicated to the proposer. An hour after submission, with nothing signed, the bid is still an open offer — so prompt written notice of the arithmetic error and a request to withdraw or correct it is both available and the honest route. Signing and swallowing $20,000 is a business choice, not the best course, and it is the one the statute makes unnecessary. Substituting cheaper materials to claw the money back is a departure from the plans and specifications and grounds for discipline. And the claim that a submitted bid can never be withdrawn is simply not the rule before acceptance.

Law Reference: Civil Code §1586

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