What has been the court ruling where a subcontractor submits an offer to a general contractor to carry out a subcontract at a specified price and, after the general contractor has used that figure in his bid for a job, the subcontractor refuses to do the work unless he is paid more money than was specified in his original offer?
Subcontractor Cox submitted an offer to general contractor Wargo to perform a subcontract at a price of $26,000 in the construction of additions and alterations to a building. Wargo then used the subcontractor's figure in his bid for the job. After the contract was Awarded to Wargo, Cox notified him that he would not do the work unless he was paid an additional $3,000 more than the original offer. Wargo then entered into a new contract with a third party at $32,000. Later he sued Cox for breach of contract, claiming damages for failure to perform. The trial court issued judgment in favor of Wargo. Cox appealed from the judgment of the trial court on the grounds that the verdict for damages was against the weight of the evidence; that the verdict was contrary to law. The Court of Appeals upheld the judgment given by the trial court (26 OhioApp [2d] 1). Judge Krenzler said: "The subcontractor was required in this case to keep the offer open for a reasonable time. He could not be bound to perform, however, unless the general contractor accepted the offer. There is also uncontroverted evidence that, when it did so, the subcontractor knew that Wargo had been awarded the principal contract, and that shortly thereafter Wargo sent Cox a telegram demanding that he begin performance under the subcontract at the originally stated price. We believe these circumstances are sufficient to show an acceptance of Cox's offer. He was thus bound to perform and is liable for damages because of failure to do so." The Court of Appeals also cited Judge Traynor's opinion in the case of Drennan v. Star (51 Cal. [2d] 409) where the facts were similar. Judge Traynor held: "When plaintiff used defendant's offer in computing his own bid, he bound himself to perform in reliance on defendant's terms. Though defendant did not bargain for this use of its bid, neither did defendant make it idly, indifferent to whether it would be used or not. "On the contrary, it is reasonable to assume that defendant submitted its bid to obtain the subcontract. It was bound to realize the substantial possibility that its bid would he the lowest, and that it would be included by plaintiff in his bid. "It was to its own interest that the contractor be awarded the general contract: the lower the subcontract bid, the lower the general contractor's bid was likely to be and the greater its chance of acceptance, hence the greater the defendant's chance of getting the subcontract. Defendant had reason not only to expect plaintiff to rely on his bid, but to want him to. Clearly, defendant had a stake in plaintiffs reliance on its bid driven this interest and the fact that plaintiff is bound by his own bid, it is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him." In the recent case of Saliba v. Allen decided by the California State Court of Appeals, it developed that subcontractor Allen's employee who figured the job forgot that the plans were drawn to half scale and his figures provided for only half the materials that would be required. The error was not discovered until shortly before the general contractors bid was to be opened at a state office 20 miles away Allen contacted Saliba's office at 1:50 p.m. about withdrawing the bid Since the time for opening the bids was 2:00 p.m., the bids were opened and Saliba was awarded the general contract. Allen refused to perform and Saliba engaged another subcontractor at a cost of $40,871 more than Allen's bid. Saliba sued to recover the $40,871 from Allen. Allen claimed that because his bid was 19 percent below the next lowest bid, Saliba should have known that there was an error and should have checked back with Allen on the figures. Allen also contended that Saliba could have withdrawn his bid in the 10 minutes between the time Saliba was notified and the time the bids were opened. The court said that ten minutes was obviously insufficient. "Moreover," the court continued, "defendant's claim ignores the fact that mere withdrawal of the general contractor's bid would not necessarily have averted damage to the general contractor. "We therefore hold that injustice can be avoided only by enforcement of the bid whenever the general contractor acting in good faith is unable to do the work called for in the bid of the prospective subcontractor (or to get the work done by another subcontractor) for a price at or below the price bid by the prospective subcontractor."