First Baptist Church of Moultrie v. Barber Contracting Co.

Court of Appeals of Georgia
377 S.E.2d 717 (1989)

ELI5:

Rule of Law:

A contractor may obtain equitable rescission of a bid based on a unilateral, material clerical mistake if the contractor provides prompt notification to the offeree, enforcement would be unconscionable, and the offeree has not been prejudiced by the withdrawal.

Facts:

The First Baptist Church of Moultrie invited sealed bids for a construction project, requiring a 5% bid bond and stating that negligence in bid preparation conferred no right of withdrawal.
Barber Contracting Company (Barber) submitted a bid for $1,860,000, which included a clause stating the bid could not be revoked for 35 days after opening.
On May 15, 1986, bids were opened, and Barber's was the lowest.
The next day, May 16, 1986, Barber's president informed the church's architect that a clerical error in totaling material costs resulted in the bid being understated by $143,120.
On May 20, 1986, Barber formally wrote to the church and its architect requesting to withdraw the bid due to the calculation error.
On May 29, 1986, the church sent Barber an executed contract based on the original, mistaken bid amount.
Barber refused to sign the contract, and the church subsequently contracted with the second-lowest bidder for $1,919,272.
The church demanded payment of the $93,000 bid bond from Barber and its surety, The American Insurance Company, which they refused.

Procedural Posture:

The First Baptist Church of Moultrie (plaintiff) sued Barber Contracting Company and its surety, The American Insurance Company (defendants), in the trial court to recover the value of the bid bond.
Both the plaintiff and the defendants filed motions for summary judgment.
The trial court denied both parties' motions for summary judgment.
The trial court certified its rulings for immediate review, and the Court of Appeals of Georgia granted these interlocutory appeals.

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Issue:

Does a contractor have the right to rescind a construction bid due to a material unilateral mistake in calculation, despite a provision making the bid irrevocable, when the mistake is promptly communicated to the owner before the bid is accepted and the owner has not been prejudiced?

Opinions:

Majority - McMurray, Presiding Judge

Yes, a contractor is entitled to rescind its bid under these circumstances. Equitable relief is available for a unilateral mistake of fact that is material to the contract, even if there is some negligence, provided the opposing party is not prejudiced. Here, Barber made a substantial clerical error, promptly notified the church before the bid was accepted, and enforcement of the mistaken bid would be unconscionable. The church was not prejudiced by the withdrawal, as it only lost the benefit of a bargain it sought to gain by taking advantage of Barber's known mistake. Provisions making a bid irrevocable are ineffective when equitable considerations, such as preventing an unconscionable result, dictate otherwise.

Analysis:

This case solidifies the principle that equitable relief, specifically rescission, can override express contractual terms like irrevocability clauses in construction bids. It establishes that a unilateral, clerical mistake, even if resulting from some negligence, is grounds for withdrawal if the mistake is material and the other party is not prejudiced. The decision prevents an offeree from 'snapping up' a bid they know or should know is mistaken, thereby protecting bidders from catastrophic losses due to honest calculation errors and promoting fairness in the bidding process.

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