Contracts & ExecutionQuestion 877 of 1632

A general contractor uses a subcontractor's bid to prepare and win the prime contract, reasonably relying on that bid. If the sub then tries to withdraw the bid, the general may argue the sub is bound under:

a.The parol evidence rule, which fixes the bid's terms as final
b.Promissory estoppel, since the general reasonably and foreseeably relied on it
c.The Statute of Frauds, which makes a written bid binding from the moment it is signed
d.A force majeure clause, which is said to excuse the sub's late withdrawal of its bid

Explanation

Drennan v. Star Paving Co. (1958) 51 Cal.2d 409 is the California authority: a subcontractor who submits a bid knowing the general will use it in a prime bid should expect reliance, and once the general wins the job on the strength of that number the sub's offer becomes irrevocable for a reasonable time. No consideration was paid to hold the bid open; reliance takes its place. (a) inverts the parol evidence rule, which excludes outside evidence contradicting an integrated writing — it cannot make an offer binding. (c) treats the writing as the source of the obligation; the Statute of Frauds says which agreements need a writing, and a signed bid is still only an offer until accepted. (d) is a clause for events beyond a party's control; changing one's mind about a price is not such an event.

Law Reference: Drennan v. Star Paving Co. (1958) 51 Cal.2d 409

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