Branco Enterprises, Inc. v. Delta Roofing, Inc.
886 S.W.2d 157 (1994)
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Rule of Law:
A subcontractor's bid constitutes a binding and irrevocable offer once a general contractor has reasonably relied upon it in submitting their own bid for a project. This reliance creates an enforceable contract under the doctrine of promissory estoppel if the general contractor is awarded the prime contract.
Facts:
- Branco Enterprises, Inc. (Branco), a general contractor, was preparing a bid to renovate a Consumers Market building.
- The project required a specific 'Derbigum' roof, which needed an installer certified by the manufacturer, Owens-Corning, to secure a warranty.
- Delta Roofing, Inc. (Delta) submitted a bid to Branco for the roofing work for $21,545, which was significantly lower than other bids.
- Branco's president, John Branham, called Delta to confirm the bid. Delta's estimator, Cliff Cook, assured Branham that if Delta could not get an alternative roof approved by the architect, Delta could get the required Owens-Corning certification.
- Branham explicitly told Cook that Branco was relying on Delta's bid to formulate its own general contract bid, to which Cook replied, 'That's fine.'
- Branco used Delta's bid, was awarded the general contract, and signed it on April 9, 1990.
- On June 4, 1990, after the project had begun, Cook informed Branham that Delta would not perform the work because it had not obtained the necessary certification from Owens-Corning.
- Branco was forced to hire another roofing company at a cost of $40,240.
Procedural Posture:
- Branco Enterprises, Inc. sued Delta Roofing, Inc. in a Missouri trial court to recover damages.
- The trial court found that the parties had a contract and that Branco had relied on Delta's bid to its detriment.
- The trial court entered a judgment in favor of Branco for $18,695.
- Delta, as the appellant, appealed the trial court's judgment to the Missouri Court of Appeals, Southern District.
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Issue:
Does a general contractor's reasonable reliance on a subcontractor's bid create an enforceable contract under the doctrine of promissory estoppel, even if a formal written subcontract is never executed?
Opinions:
Majority - Parrish, J.
Yes, a general contractor's reasonable reliance on a subcontractor's bid creates an enforceable contract under the doctrine of promissory estoppel. The court found that all elements of promissory estoppel were met. Delta made a promise by submitting its bid and assuring Branco it could get certified. It was foreseeable that Branco would rely on this promise, as is standard practice in the industry. Branco did, in fact, rely on the bid when submitting its own successful general contract bid. Finally, an injustice would occur if the promise were not enforced, as Branco would be forced to absorb the significant cost difference of hiring a replacement subcontractor. The court, citing Drennan v. Star Paving Co., reasoned that a subcontractor has a stake in the general contractor's reliance on its bid, as it increases the chance of both parties securing the work. Therefore, Delta's bid became a binding promise when Branco was awarded the prime contract.
Analysis:
This decision solidifies the application of promissory estoppel in the context of construction bidding in Missouri, aligning it with the influential California precedent set in Drennan v. Star Paving Co. It establishes that a subcontractor's bid is not merely a revocable offer but transforms into a binding, irrevocable option contract once the general contractor relies on it. This protects general contractors from the financial harm of subcontractors withdrawing low bids after the general contractor is already legally bound to the project owner. The ruling reinforces fairness in the bidding process by preventing subcontractors from strategically underbidding and then reneging on their promise.
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