Tyra v. Cheney

Minnesota Supreme Court · Contracts

Contractsunilateral mistakemistaken bidknowledge of mistakebad faith acceptancemutual assentno meeting of the mindsreasonable value

Facts

Defendant had a contract to add to and repair a school building, and plaintiff submitted figures for roofing and sheet metal work. Plaintiff claimed his written bid accidentally omitted a $963 item that had been included in his earlier oral figures, while defendant claimed he received only the written bid. The trial court submitted the case on the theory that if defendant later told plaintiff to proceed with knowledge of plaintiff's mistake and knowledge that plaintiff believed the written bid matched the earlier oral bid, then defendant could not enforce the lower mistaken bid. Plaintiff also had a separate late-August contract for metal doors, and later performed the work for which he sought recovery of reasonable value.

Issue

When a contractor directs performance after receiving a written bid that mistakenly omits part of the price, can the contractor enforce that mistaken bid if he knew of the mistake and knew the bidder was unaware of it? Also, what burden of proof applies to that issue?

Rule

One cannot snap up an offer or bid knowing that it was made in mistake. If the offeree is cognizant of the offeror's mistake and knows the offeror is unaware of it, there is no true meeting of the minds and thus no binding contract at the mistaken price; in that event, recovery may be had for the reasonable value of the work. In such a case, described as virtually one of fraud, the issue is proved by a fair preponderance of the evidence, not by the clear-and-convincing standard used in reformation.

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

In Des Moines, Nolan Reed, a masonry subcontractor, orally told Summit Field Builders that he would do a package of repair work for about $78,000. The next day he emailed a written bid for $61,000 because he accidentally left out a $17,000 stone-restoration item. Summit's project manager immediately recognized the omission from the earlier conversation, said nothing, and directed Nolan to begin.

If Nolan later sues for the reasonable value of the labor and materials rather than the written price, what is the best result?

Explanation. The governing rule is that one may not snap up an offer known to be mistaken. If the offeree knows the bid omitted an item and knows the bidder is still unaware of the mistake, there is no true meeting of the minds at the mistaken price. The result is not enforcement of the higher oral amount, but failure of contract formation at the mistaken price, permitting recovery of reasonable value.