The Law School Authority

Holman Erection v. Orville E Madison and Sons, Inc Case Brief

Summary of Holman Erection v. Orville E Madison & Sons, Inc 

Facts: Plaintiff, Holman, is a sub-contractor. Holman sent his bidoff to seven general contractors. One of the seven, Madison, the defendant was chosen for the City project. Holman was listed on the bid, but was never contacted by defendant. Plaintiff heard defendant chose to go w/ another sub-contractor Van Night, allegedly because plaintiff had to use a minority contractorwhich Van Knight qualified as.  Plaintiff learned from another contractor that plaintiff was not in act listed. Plaintiffsought action. The trial court held that no contract had been made and grantedsummary judgment for the defendant. Holman appealed to this court.

Issue: Is a general contractor bound by its bid, and thus held tothe same standards as a subcontractor?

Rule: No, a general contractor is not bound by its bid because asub does not suffer detrimental reliance if the gen later decides to reject the bid.

Analysis: Subcontractors may be obligated to perform by application of promissory estoppel. However, the general contractor remains free to avoid the listed subcontractor. There are several reasons for this. The subcontractor isbound because by the existence of justifiable reliance by the general contractor on the sub’s price.  After bids are received the gen evaluates them and submits, once the gen has won the contract, he is bound to his bid, if the sub were to them u their bid, it wouldplace the gen in a financially detrimental position.  The sub does not rely on the gen, and thussuffers no detriment. The only detriment the sub suffers are the costsassociated w/ running a business. Custom and practice is the submission of bidsvia the tele in the hours before the gen must submit his bid.  The specifics are left for future negations,and the info given at that time usually consists of price and work included.The last minute bid process in well entrenched in the cnstr. Industry.There are specifics which are left for future negotiations ie quality of work,capability, reliability, etc.  One ofthose considerations was that of MBE regulations. The conract may have beenlost if plaintiff had not made the decision to follow the MBE and go /w theother sub.  “Such a result imposes agreater cost on the project and a loss to the general contractor.


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