Summary of Universal Computer Systems v. Medical Services Assoc. of Penn.
U.S. Ct. of App, 1980
Relevant Facts: In 1975, Df Assoc. solicited bids for the lease of a computer. Pl Universal prepared a bid proposal. An employee of df was contacted by president of Universal and informed that the proposal would be arriving Monday by airline, but it needed to be picked up from the airport. The employee promised to pick it up before the noon deadline. After sending the proposal via air, Universal contacted the employee liason to relay the necessary information. The employee then stated that he could not pick up the proposal. Other arrangements were unsuccessful and the bid was rejected as untimely.
Legal Issue(s): Whether an agent/employee had authority to make a binding promise to pick up a bid from a potential bidder, and if so is the principal bound by that promise?
Court’s Holding: Yes employee had apparent authority, and principal is bound.
Procedure: Pl filed in U.S. D. Ct. seeking breach damages. Jury trial verdict awarded $13,000 to pl. Df filed nov (liability and ?) and m 4 new trial; nov was granted (liability) denied otherwise, pl appealed that and df appeal denial for new trial. Affirm U.S. D. Ct. denial of NOV and reversed liability portion of NOV, new trial for damages.
Law or Rule(s): A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee. The promise must actually induce such action or forbearance and the circumstances must be such that injustice can only be avoided by enforcement of the promise
Court Rationale: The employee had authority to make the promise, and the pl relied upon the same to his detriment, pl was reasonably unaware of the applicability of the federal regulations interdicting employee’s promise. Pl incurred a substantial detriment as a result of relying upon df’s promise. Pl has suffered an injustice in being deprived of the service promised by the employee. The df promised to pick up the bid and pl relied upon that promise to its detriment.
Plaintiff’s Argument: df promised to pick up the bid proposal and when employee failed it was at the detriment of the Pl.
Defendant’s Argument: The employee lack actual authority to make any promises conferring preferential treatment of a potential bidder.
Damages were awarded on basis of conjecture and speculation. The final bid was subject to approval by HEW, and there was no way to determine the amount pl would, if granted the k, have been awarded.