Takeaway
In short, this case holds that an Idaho public-works bidder may rescind a bid containing a material clerical error when enforcement would be unconscionable, the error was not culpably negligent, the public owner suffers no prejudice beyond losing the bargain, and the bidder gives prompt notice.
Boise Junior College District solicited bids for a construction project estimated to cost $150,000. Mattefs Construction Company submitted the second-lowest bid, $141,048, backed by a bid bond promising to pay the difference between its bid and the next accepted bid if it refused to contract. The specifications also stated that bids could not be withdrawn for 45 days after opening.
While assembling its bid under last-minute bidding pressure, Mattefs's superintendent failed to carry the lowest glass-and-glazing subcontract bid, $19,741, onto the work sheet. The omission represented about 14 percent of Mattefs's total bid. Fulton Construction submitted the lowest bid, $134,896, but declined to sign the contract. The District then tendered the contract to Mattefs. After discovering the omission, Mattefs promptly notified the District and refused to execute a contract at its erroneous price. The District ultimately awarded the work to Cain and Hardy, the third-lowest bidder, for $148,915, and sought to collect on Mattefs's bid bond.
The trial court held that Mattefs was entitled to equitable rescission of its bid and that the bid bond was not forfeited. The District appealed, challenging the findings supporting rescission.
Issue #1
Whether omission of the glass-and-glazing subcontract bid was a material mistake warranting equitable relief.
Holding
Yes. Omitting an item equal to approximately 14 percent of the total bid was a substantial and material error.
Reasoning
The trial court found that the omitted glass-and-glazing item was the second-largest subcontract item in the project, exceeded only by the mechanical subcontract, and amounted to about 14 percent of Mattefs's bid. The Supreme Court had no difficulty concluding that an error of that size was material.
The District relied on decisions that had denied relief despite substantial mistakes, but the Court declined to adopt such a harsh approach. Following authorities recognizing rescission for significant clerical omissions, the Court held that the materiality inquiry turns on the real importance of the omitted item to the bid, not on a rigid rule insulating public owners from plainly consequential errors.
Issue #2
Whether enforcing Mattefs's erroneous bid would be unconscionable.
Holding
Yes. Performance at the mistaken bid would impose a substantial pecuniary loss on Mattefs.
Reasoning
Materiality alone does not establish unconscionability. A contractor might omit a large item yet still earn enough profit that enforcement would cause no serious hardship. The relevant question is whether enforcing the mistaken bid would produce a substantial and inequitable loss.
Here, Mattefs's costs after including the omitted glass work would have been roughly $151,000, while its bid was only $141,048. Thus, performance would cause a loss of at least $10,000. That substantial loss made enforcement unconscionable, especially because the District suffered no corresponding injury from the withdrawal.
Issue #3
Whether Mattefs's clerical omission resulted from culpable negligence or violation of a positive legal duty, barring rescission.
Holding
No. The trial court permissibly found that the omission was an inadvertent clerical mistake rather than gross, willful, or culpable negligence.
Reasoning
Equity does not relieve a bidder whose mistake stems from a violation of a positive legal duty or from culpable negligence. But this standard is directed to gross or willful carelessness, lack of good faith, or a serious dereliction in calculating the bid; it does not ordinarily encompass an inadvertent clerical or transcription error.
Mattefs's superintendent testified that he had called to verify the glass bid, was interrupted by unexpected telephone calls while working alone near the bid deadline, and then mistakenly failed to enter the glass figure on the work sheet. The office manager and company president also failed to detect the omission before submission, but the evidence showed that Mattefs used the ordinary local method for preparing bids under the familiar time pressures of public bidding.
Because substantial and competent evidence supported the trial court's finding that Mattefs used ordinary care and acted without fraudulent, willful, or grossly negligent intent, the Supreme Court would not overturn that factual determination. A reasonable and cautious businessperson can make the kind of clerical error that occurred here.
Issue #4
Whether the bid's 45-day irrevocability provision and the bid bond prevented rescission because the District was prejudiced by Mattefs's withdrawal.
Holding
No. The District was not prejudiced beyond losing the benefit of an inequitable bargain, and the irrevocability provision did not require enforcement of a bid affected by a qualifying clerical mistake.
Reasoning
A bidder may not withdraw where withdrawal would impose a substantial hardship on the offeree. But the District expected the project to cost about $150,000 and ultimately obtained the work for approximately $149,000. Its claimed injury was only the loss of the opportunity to have the work done for Mattefs's erroneous $141,048 bid.
The Court held that a public owner cannot characterize the loss of an inequitable bargain as legal prejudice sufficient to defeat rescission. The bid bond did not create presumed damages overriding equitable principles, because not every bidding mistake permits rescission and the available remedy remains limited to bona fide clerical or mathematical errors.
The provision making bids irrevocable serves to prevent bidders from withdrawing merely because they change their minds or make errors of judgment about costs. It does not authorize a governmental entity to take unconscionable advantage of a proven clerical error that would justify relief between private parties.
Issue #5
Whether Mattefs gave prompt notice of its mistake before the District attempted to accept its bid.
Holding
Yes. Mattefs gave sufficiently prompt notice, and the District had actual notice of the error before it tendered the contract to Mattefs.
Reasoning
The bids were opened on October 5. After Mattefs's president returned to the office and learned of the omission, the District's secretary was informed that evening, at least informally, that Mattefs had made an error. The next morning, Mattefs explained the nature of the mistake in detail and followed with a written objection to signing at the bid price on October 7.
The District did not formally tender the contract to Mattefs until October 11. Therefore, it had actual notice of the mistake and Mattefs's position well before its attempted acceptance. Consistent with the authorities, rescission was appropriate because notice preceded acceptance and the District showed no loss apart from the benefit of the erroneous bid.