Elsinore Union Elementary School District v. Kastorff

Supreme Court of California · 1960 · Contracts

353 P.2d 713

Updated July 9, 2026

contractsmistakerescissionconstruction bidspublic contractsunilateral mistakeclerical errorpublic bid

Facts

Kastorff submitted the lowest bid for additions to the school district's buildings, but in compiling his bid he mistakenly failed to carry any plumbing amount into the total, after receiving late subcontractor bids and deducting $3,000 under the erroneous belief that a higher plumbing bid had already been included. The next morning he checked his worksheets, discovered the omission, immediately showed the worksheets to the district's architects, and promptly requested to withdraw and rescind his bid. The district was informed of the nature of the error before written notice of award was later sent, but it refused to allow withdrawal and sought the difference between Kastorff's bid and the higher replacement contract, plus recovery on the bid bond.

Issue

May a contractor rescind a public-works bid after an honest clerical error materially understated the bid, when the contractor promptly notified the public entity and rescinded after discovering the mistake? More specifically, did Kastorff's conduct bar rescission because of negligence or because he initially said his figures were correct when asked at bid opening?

Rule

A public-works bidder may rescind a bid for mistake of fact when the mistake is material, not caused by neglect of a legal duty, enforcement of the bid would be unconscionable, the other party can be placed in statu quo, and the bidder gives prompt notice of rescission and restores or offers to restore anything of value received. Knowledge by the other party that the bidder is acting under mistake is treated as equivalent to mutual mistake for purposes of rescission, and not all carelessness constitutes neglect of a legal duty.

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

The City of Fresno solicited sealed bids for a library renovation. Owen Mercer, a general contractor, submitted the lowest bid after accidentally failing to transfer a $48,000 electrical subcontract amount from his worksheet to his final total; the next morning he discovered the omission, immediately showed his worksheets to the city's project architect, and sent a same-day letter withdrawing and rescinding his bid before any written notice of award was sent.

If Fresno sues Owen for refusing to execute the construction contract at the bid price, which is the strongest argument for Owen?

Explanation. The majority rule permits rescission of a public-works bid for a material mistake of fact when the mistake was not caused by neglect of a legal duty, enforcement would be unconscionable, the public entity can be returned to statu quo, and the bidder promptly rescinds and restores anything of value received. Here the facts track those requirements: honest clerical omission, prompt notice, notice to the city before it insists on performance, and nothing of value received. The rule does not make all mistaken bids revocable, nor does it require proof of bad faith. (Derived from Elsinore Union Elementary School District v. Kastorff (n.d.).)