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Supreme Court of California - 333 P.2d 757, 51 Cal. 2d 409
Tags: Contracts, Acceptance, Options contracts
tl;dr:
A general contractor ("GC") relied on a subcontractor's ("SC") bid when bidding for a project. The GC won the contract for the project, but the SC withdrew its offer because it couldn't do the job for the price it listed in the bid.Video Summary
Case Summary
In the 1958 case Drennan v. Star Paving Company, the California Supreme Court ruled in favor of a general contractor who had relied on a subcontractor's bid when obtaining a main contract, only for the subcontractor to then refuse to perform the work at that price. The case is significant because it exemplifies the use of promissory estoppel to enforce a promise lacking consideration.
The court found that the subcontractor's bid was not a legally binding contract but a promise that caused the general contractor to reasonably rely on it. As a result, the subcontractor could not revoke the bid after the general contractor had incorporated it into their own bid and secured the main contract. The court rejected the subcontractor's claim of making a mistake in their bid and the general contractor's failure to mitigate damages.
This case highlights that a promise can still be enforced without mutual agreement or consideration if allowing the promisor to escape liability would be unfair. Additionally, it shows that courts will take into account the parties' expectations and actions to determine whether the reliance is reasonable.
DeepDiveHighlight a legal term to see the definition
The case involves a dispute between a licensed general contractor and a defendant who refused to perform paving work according to a bid submitted to the plaintiff. The trial court found that there was no enforceable contract between the parties as there was no evidence that the defendant offered to make their bid irrevocable or that the plaintiff's use of the bid constituted acceptance. The issue in the case is whether the defendant's bid was irrevocable before acceptance. The defendant may be liable for damages if enforcing the promise is necessary to avoid injustice. Acting in justifiable reliance on an offer may be sufficient reason for making a promise binding under Section 90.
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