Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc.

United States Court of Appeals, Third Circuit
482 F.3d 247 (2007)

ELI5:

Rule of Law:

The express terms of a written document, such as a disclaimer stating a bid is not a firm offer, override contrary industry customs or trade usage. Reliance on a bid that explicitly directs the recipient not to rely on it is unreasonable as a matter of law, precluding claims for breach of contract and promissory estoppel.

Facts:

Fletcher-Harlee Corp., a general contractor, solicited bids from subcontractors for a construction project, stipulating that all bids must be held open for at least 60 days.
Pote Concrete Contractors, Inc. submitted a written price quotation for the concrete work.
Pote's quotation included express language stating it was for informational purposes only, did not constitute a 'firm offer,' and should not be relied on.
The quotation from Pote also specified that Pote did not agree to be held liable for any of the terms submitted.
Despite these disclaimers, Fletcher-Harlee relied on Pote's favorable price quotation when preparing and submitting its own general bid for the project.
After Fletcher-Harlee won the general contract, it attempted to enter into a formal contract with Pote based on the submitted quotation.
Pote then raised its price, which caused Fletcher-Harlee to hire a different subcontractor at a significantly higher cost.

Procedural Posture:

Fletcher-Harlee Corp. sued Pote Concrete Contractors, Inc. in the U.S. District Court, asserting claims for breach of contract and promissory estoppel.
Pote filed a motion to dismiss for failure to state a claim upon which relief can be granted.
The District Court granted Pote's motion and dismissed Fletcher-Harlee's complaint.
Fletcher-Harlee, as the appellant, appealed the dismissal to the U.S. Court of Appeals for the Third Circuit, with Pote as the appellee.

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Issue:

Does a general contractor have a valid claim for breach of contract or promissory estoppel when it relies on a subcontractor's price quotation that explicitly states it is not a firm offer and should not be relied upon?

Opinions:

Majority - Ambro, Circuit Judge

No. A subcontractor's price quotation that expressly disclaims being a firm offer cannot form the basis for either a breach of contract or a promissory estoppel claim, even if relying on such bids is common in the industry. For a contract to be formed, there must be an offer and an acceptance. Fletcher-Harlee's solicitation was an invitation to make offers. Pote’s response was not an offer because it explicitly stated it was not a firm offer and that Fletcher-Harlee's assent would not conclude a deal. Since there was no offer from Pote, there could be no acceptance by Fletcher-Harlee, and thus no contract was formed. Similarly, a promissory estoppel claim requires reasonable reliance. Fletcher-Harlee's reliance on Pote's quotation was unreasonable as a matter of law because the document itself contained a clear and unambiguous disclaimer instructing Fletcher-Harlee not to rely on it. The plain language of the document supersedes any conflicting industry customs.

Analysis:

This decision strongly affirms the principle that express, unambiguous contract terms will triumph over implied terms derived from industry custom or trade usage. It clarifies that while courts often look to commercial practice to interpret agreements, such practices cannot be used to contradict the plain language of a document. The case serves as a critical warning to industry participants, particularly general contractors, that they cannot ignore explicit disclaimers and must read all terms carefully. This precedent reinforces the power of parties to contract around default rules and customs, emphasizing that reliance on an offer is only reasonable when the offer itself does not preclude such reliance.

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