Boise Junior College District v. Mattefs Construction Co.

Supreme Court of Idaho · Contracts

Contractsrescissionmistaken bidpublic construction biddingunilateral mistakeclerical errormaterial mistakeunconscionability

Facts

Mattefs was the second-lowest of ten bidders on a public construction contract and submitted a bid bond promising to pay the difference between its bid and the next higher accepted bid if it refused to contract; the specifications also stated the bid could not be withdrawn for 45 days after opening. In preparing its bid, Mattefs inadvertently omitted the glass and glazing subcontract bid, the lowest of which was $19,741, an item amounting to about 14% of its total bid. After the lowest bidder refused to sign, the contract was tendered to Mattefs, which also refused, and the contract was ultimately awarded to the third-lowest bidder. The district then sought to enforce Mattefs's bid bond.

Issue

Whether a contractor that submitted a public works bid containing a material clerical mistake was entitled to equitable rescission under the circumstances of this case, despite a bid bond and a specification that bids could not be withdrawn for 45 days.

Rule

A bidder on a public works contract is entitled to equitable rescission for a mistaken bid if it establishes: (1) the mistake is material; (2) enforcement of a contract on the erroneous bid would be unconscionable; (3) the mistake did not result from violation of a positive legal duty or from culpable negligence; (4) the offeree will not be prejudiced except by loss of its bargain; and (5) prompt notice of the error is given. Relief is generally available for clerical or mechanical mistakes, not for errors of judgment.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeview Builders submitted a bid to the City of Denver for a public library addition. While transcribing numbers from its worksheet, its estimator accidentally omitted a masonry subcontract worth $84,000 from a $600,000 bid, and the city learned of the omission the next morning before tendering any contract.

If Lakeview seeks equitable rescission of its bid, which is the strongest argument that the materiality element is satisfied?

Explanation. The majority held that an omitted item amounting to about 14% of the total bid was substantial and material as a matter of law. Materiality focuses on the significance of the error within the bid, not on offeree reliance or a requirement that the mistake exceed 50%. (Derived from Boise Junior College District v. Mattefs Construction Co. (n.d.).)