Wil-Fred's, Inc. v. Metropolitan Sanitary District
372 N.E.2d 946 (1978)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A contract may be rescinded for a unilateral mistake if the mistake is material, occurred despite the exercise of reasonable care, enforcement of the contract would be unconscionable, and the other party can be placed in the status quo.
Facts:
- The Metropolitan Sanitary District of Greater Chicago advertised for bids on a rehabilitation project, with specifications requiring plastic pipes that could withstand 'standard construction equipment'.
- Wil-Fred’s Inc. hired Ciaglo Excavating Company as a subcontractor for the project.
- Relying on the specifications, Ciaglo mistakenly assumed heavy equipment could be used on the plastic pipes and underestimated its costs by $150,000.
- Based on Ciaglo's erroneous quote, Wil-Fred's submitted a bid of $882,600, which was more than $235,000 lower than the next lowest bid.
- After the bids were opened, Wil-Fred's discovered Ciaglo's error when Ciaglo informed Wil-Fred's it would have to withdraw its quotation.
- Two days after the bid opening, Wil-Fred’s sent a telegram to the Sanitary District to withdraw its bid and request the return of its $100,000 bid deposit.
Procedural Posture:
- Wil-Fred’s Inc. filed a complaint for preliminary injunction and rescission against the Metropolitan Sanitary District in the trial court.
- The trial court granted rescission and ordered the Sanitary District to return the $100,000 bid deposit to Wil-Fred’s.
- The Metropolitan Sanitary District, as appellant, appealed the trial court's judgment to the intermediate appellate court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a general contractor's unilateral mistake in a bid, caused by its subcontractor's error, justify rescission of the contract and the return of its bid deposit when the mistake is material, the contractor exercised reasonable care, enforcement would be unconscionable, and the other party can be returned to the status quo?
Opinions:
Majority - Mr. Justice Perlin
Yes, a general contractor's unilateral mistake in a bid justifies rescission where the mistake is material, occurred despite reasonable care, enforcement would be unconscionable, and the other party can be placed in the status quo. The court found that all four conditions for rescission were met. First, the subcontractor's $150,000 error, representing 17% of the total bid, was a material mistake. Second, Wil-Fred's exercised reasonable care by relying on Ciaglo, a reputable subcontractor with whom it had a positive history, and the subcontractor's mistake was a mixed error of fact and judgment partly induced by the Sanitary District's own misleading specifications. Third, enforcing the contract would be unconscionable, as Wil-Fred's would either lose $150,000 performing the work or forfeit its $100,000 deposit, which would severely damage its bonding capacity. Finally, the Sanitary District could be returned to the status quo because it was notified of the mistake promptly, before the contract was awarded, and could simply award the contract to the next lowest bidder without any significant loss.
Analysis:
This decision is significant because it moves away from a rigid distinction between mistakes of fact (often remediable) and mistakes of judgment (often not). The court adopted a more equitable approach, holding that the facts surrounding the error, rather than its label, should determine whether relief is granted. It establishes that a general contractor can obtain rescission based on a subcontractor's substantial error if the general contractor's reliance on the sub-bid was reasonable. This provides a crucial equitable remedy for bidders who make good-faith, material errors, provided they act promptly to notify the awarding authority before it has detrimentally relied on the bid.
Unlock the full brief for Wil-Fred's, Inc. v. Metropolitan Sanitary District