A general contractor reviews bids and selects a bid from a young subcontractor, which is the lowest bid. After submitting his own bid, the subcontractor realizes he could have charged more and the general contractor’s bid is selected. The general contractor sues the subcontractor. The best basis for recovery is that the general contractor detrimentally relied on the subcontractor’s bid.

• A. Yes, because the general contractor detrimentally relied on the subcontractor’s bid.
• B. No, because bids are not binding contracts.
• C. Yes, because the bid created a contractual obligation regardless of the later realization.
• D. No, because reliance on bids is not enforceable.

Answer: (A)

The key idea is promissory estoppel in bid situations. When a subcontractor submits a bid, that bid functions as an offer to perform at the stated price, and acceptance typically occurs when the owner or general contractor awards the contract to that bidder. The general contractor’s decision to rely on that bid—for budgeting, planning, and proceeding with the project—constitutes reliance on the bid’s terms. If the subcontractor later realizes he could have charged more and the general contractor’s bid is accepted, the general contractor can show that he suffered a detriment based on that reliance. Promissory estoppel allows recovery to avoid injustice when a party reasonably relies on a bid and incurs costs or loses opportunities as a result.

So, the best basis for recovery is that the general contractor detrimentally relied on the subcontractor’s bid. The other options fail because bids can give rise to enforceable reliance through promissory estoppel, rather than creating an unconditional contract simply by presenting a bid, and because reliance on bids can be enforceable in certain circumstances.