DATE: January 13, 2004

STUDENT: Lisa Nash, 1L

TOPIC:  Reliance

CASE:  Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757 Supreme Court of California, [1958]

FACTS: On July 28, 1955, plaintiff, a licensed general contractor, was preparing a bid on the “Monte Vista School Job” in the Lancaster school district.  It was customary in that area for general contractors to receive the bids of subcontractors by telephone on the day of bidding and to rely upon these bids in computing their own bids.  Defendant placed the lowest bid for paving work for the Monte Vista School of approximately 75 bids received by various subcontractors.  Plaintiff computed his own bid accordingly and submitted it with the name of the defendant as the subcontractor for paving.  When the bids were opened on July 28^th, plaintiff’s bid was lowest and he was awarded the contract.

On his way to Los Angeles the next morning, plaintiff stopped at defendant’s office.  He was immediately told that the bid placed by defendant was a mistake.  Defendant refused to do the paving work for less than $15,000.

After several months of soliciting bids from other subcontractors, plaintiff was able to find another subcontractor who could do the paving work for $10,948.60.  Plaintiff sues for $3,817 [the difference between defendant’s bid and the cost of the paving to plaintiff] plus court costs.

Defendant states there was no enforceable contract between the parties because the offer was revocable and it was revoked before plaintiff communicated his acceptance to defendant.

HISTORY:   The trial court found for the plaintiff and awarded $3,817 in damages.  Defendant appeals to the California Supreme Court.

ISSUE: Did plaintiff’s reliance make defendant’s offer irrevocable?

HOLDING: Yes.

RULE/ANALYSIS: A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.

Defendant’s offer constituted a promise to perform and had reason to believe that if its bid was the lowest, plaintiff would use it.  Defendant also did not make it clear in its bid that it was revocable at any time before acceptance by plaintiff.

SUMMARY:  Reasonable reliance may replace the need for consideration which is normally required to make an offer binding.  When the defendant bid on the contract, it should have expected the plaintiff to place a bid according to the amount bid by its subcontractor.  The only way to remove the injustice is to enforce the promise made by defendant.  Judgment was affirmed.