Baird Co. v. Gimbel Bros., Inc.

United States Court of Appeals for the Second Circuit · Contracts

Contractsoffer and acceptancerevocationpromissory estoppelsubcontractor bidsofferacceptancerevocation

Facts

The defendant sent contractors bidding on a Pennsylvania public building project an offer to supply all required linoleum at stated lump sums, but it had mistakenly underestimated the amount needed by about one-half. The plaintiff received the offer and, before receiving the defendant's revocation telegram, used the quoted prices in submitting its own bid for the general contract. The same day, after discovering its mistake, the defendant telegraphed withdrawal of the offer and later confirmed the withdrawal by letter. After the public authorities accepted the plaintiff's bid, the plaintiff formally accepted the defendant's offer, and the defendant refused to perform.

Issue

Whether the defendant's price quotation became binding when the plaintiff relied on it in preparing and submitting its general bid, despite the defendant's revocation before the plaintiff's formal acceptance. Also, whether promissory estoppel made the offer irrevocable because the plaintiff relied on it.

Rule

An ordinary offer is ineffective if accepted after revocation. Reliance on an offer for an exchange does not by itself make the offer irrevocable or create promissory estoppel where the offeror sought a bargain and conditioned obligation on receipt of the offeree's acceptance or other stipulated consideration, rather than on the offeree's reliance or use of the offer.

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Summit Glass Supply, a fictional supplier in Newark, emailed Mason Pike Builders in Columbus a quotation to furnish all specified windows for a courthouse project. The email stated that the prices were offered for prompt acceptance after Mason Pike was awarded the prime contract. Before Mason Pike sent any acceptance, Summit sent a revocation that Mason Pike received after it had used the quoted numbers in its bid but before the city awarded the prime contract.

If Mason Pike later wins the prime contract and then sends an acceptance, is Summit contractually bound to supply the windows at the quoted price?

Explanation. Under the majority's rule, an ordinary offer may be revoked any time before acceptance unless something clearly makes it irrevocable. Here the quotation contemplated later communicated acceptance after award of the prime contract, so merely using the numbers in the bid was not acceptance. Because revocation arrived before acceptance, no contract was formed. (Derived from Baird Co. v. Gimbel Bros., Inc. (n.d.).)