Case Name: Drennan v. Star Paving Co.
Plaintiff/Appellant: Drennan (General Contractor)
Defendant/Appellee: Star Paving Co. (Subcontrator)
Citation: 51 Cal. 2d 409, 333 P.2d 757 (1958)
Issue: Whether plaintiff’s reliance on the defendant’s subcontracting bid made the defendant’s offer irrevocable.
Key Facts: The plaintiff, a general contractor, was receiving bids from subcontractors in order to bid on the Monte Vista School Job. The defendant, a subcontractor, contacted the plaintiff by phone and submitted a bid for the paving work for $7,131.60 which was the lowest bid the plaintiff received for this job. The plaintiff won the contract and promptly informed the defendant in person. The defendant then told the plaintiff that they had made a mistake and would not be able to do the paving work for less than $15,000. Plaintiff then had to engage another paving company to do the work for $10,948.60.
Procedural History: The plaintiff won a judgment to recover damages caused by defendant’s refusal to perform the paving work according to its original bid. Defendant appealed.
Holding: The defendant’s offer was irrevocable.
Reasoning: The defendant had reason to expect that if its bid proved the lowest it would be used by the plaintiff and it induced “action…of a definite and substantial character on the part of the promisee. Merely acting in justifiable reliance on an offer may in some cases serve as sufficient reason for making a promise binding (Restatement (First) 90). The purpose of this section is to make a promise binding even though there was no consideration “in the sense of something that is bargained for and given in exchange.”
Defendant had reason not only to expect plaintiff to rely on its bid but to want him to. Also, the mistake made by the defendant was not apparent to the plaintiff. The general contractor’s actions were reasonable because he was following the general practices of the industry. The subcontractor made the mistake originally and had superior knowledge of paving work.
Note: Justice Traynor is associated with more modern approach of interpretation of contracts.