1^st Baptist Church v Barber Contracting Co.
Ct of App GA 377 S E 2d [1989]
Author:- Sam Biers

Avoidance of the K : Unilateral Mistake

Relevant Facts:  Pl, 1^st, invited bids to construct a music, educational, and recreation bldgs.  The bids were to be accompanied by a bid bond in the amt of 5% of the bid. Negligence in preparing the bid was expressly declared not to be a right of w/d.  Df submitted a bid w/ a bid bond.  The bids were opened and Df was notified that it was the lowest bid.  The next day, and prior to execution of K, Df discovered that a mistake in totaling the material costs had occurred - this resulted in a $143,120 under bid.  3 days later Df notified Pl in writing of the error and request for w/d and the return of the bid bond.  Pl refused and Ked w/ next lowest bid.  Pl then demanded payment on the bid bond for $93,000.

Legal Issue(s): Whether Df was entitled to rescind its bid upon discovering that it was based on a miscalculation, or whether Df should forfeit the bid bond to Pl b/c it refused to execute K following acceptance of its bid by Pl?

Court’s Holding:   Df was entitled to rescind.

Procedure: Both parties filed Summary w/ tr ct; tr ct denied both and certified for interlocutory review; Ct of App tr ct erred in not granting Df’s Summary, correct in denying Pl.

Law or Rule(s): GA law provides that rescission and cancellation are allowed upon the ground the mistake of fact material to the K of one party only.  The mistake must be an unintentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence.

Court Rationale: The prerequisites are 1) the mistake is of such consequence that enforcement would be unconscionable; 2) the mistake must relate to the substance of the consideration; 3) the mistake must have occurred regardless of the exercise of ordinary care; 4) it must be possible to place the other party in status quo.  The bidder must give prompt notice of the mistake and intent to w/d. 

Df promptly notified Pl that a mistake was made in the calculations of the bid. Pl had actual knowledge of the mistake before it forwarded the K to Df. The mistake was a simple clerical error.  The mistake did not amt to negligence preventing equitable relief.  The allow Pl to take advantage of the mistake would not be just. The mistake was material to the contract - it went to the substance of the consideration.  Relief in equity may be granted even in cases of negligence by the complaintant if it appears that the other party has not been prejudiced.  Pl lost only what it sought to gain by taking advantage of the mistake.

Plaintiff’s Argument: Rescission is improper b/c by written agreement Df agreed not to w/d the bid for a period of 35 days after the bids were opened and the language forbid w/d based on negligence.   Df’s miscalculation constituted negligence.

Defendant’s Argument: Df’s mistake was made regarding a basic fact on which he submitted the bid, which was based upon, and Df notified Pl prior to Pl forwarding the K.