Elsinore Union Elementary School District v. Kastorff – Case Brief
Elsinore Union Elem. Sch. Dist. v. Kastorff, 54 Cal. 2d 380, 6 Cal. Rptr. 1, 353 P.2d 713 (1960).
Facts: Elsinore Union Elementary School District (P) invited general contractors to prepare bids for additions to the district’s school buildings. Kastorff (D) prepared a general bid using bids from various subcontractors but mistakenly neglected to include a $6,500 bid for the plumbing work.
Kastorff submitted the lowest bid at $89,994 and the school board requested confirmation that the bid was correct. Kastorff affirmed the bid and was awarded the contract. He discovered the error the next day and rescinded the bid. The school board nevertheless awarded the contract to Kastorff and refused to release him from the contract.
When Kastorff refused to perform the school board awarded the bid to the next highest bidder at $102,900. The school board sued to recover the difference between the two bids and recovery of $4,499.60 against a surety under the terms of the bond. The trial court entered judgment for the school board on both claims and Kastorff appealed.
Issue: Under what circumstances may a general contractor rescind a bid if he makes a clerical mistake that is material to the contract?
Holding and Rule: A general contractor may rescind a bid that was miscalculated due to clerical error if the other party knows or has reason to know of the error.
A contractor’s bid generally gives the soliciting party an irrevocable option to accept the bid and bind the contractor. This contract right may be subject to rescission by the contractor however if all the requirements of rescission are present for a mistake in making the bid.
Rescission for Mistake – Kemper Rules: A contractor is allowed to rescind his bid for a mistake of fact if: 1) the other party knows or has reason to know of the contractor’s clerical error; 2) the mistake is material to the contract; 3) enforcement of the contract would be unconscionable; 4) the other party can be placed in status quo; 5) the party seeking relief gives prompt notice of the rescission and 6) restores everything of value that he received.
In this case the worksheets submitted by Kastorff included an entry for a subcontract bid for the plumbing work, but the total amount of the bid was short by that amount. It is irrelevant that Kastorff reaffirmed his bid because he inspected the worksheets at the earliest practicable moment and promptly notified the school board and rescinded his bid.
Disposition: Reversed.
See Drennan v. Star Paving Co. and James Baird Co. v. Gimbel Bros. Inc. for additional cases involving issues of general contractor bids in construction contracts.