EA Coronis Assocs. v. M. Gordon Constr. Co.

At common law, an offer unsupported by consideration could be revoked before acceptance. UCC section 2-205 changes that rule for a merchant's signed written offer to buy or sell goods, but only when the writing itself gives assurance that the offer will be held open.

Coronis's signed letter quoted prices, but it contained no term promising that the quotation would remain open for any stated or reasonable period. The Code's text and official comment make a signed writing with such an assurance essential; commercial custom or reliance on oral firm offers cannot supply the missing written assurance.

Because the letter did not meet section 2-205's express requirements, the court did not need to decide whether the letter was an offer in the first place or whether a price quotation for steel delivered and erected concerned "goods" within Article 2.

Promissory estoppel enforces a promise when the promisor should reasonably expect it to induce definite and substantial action or forbearance, it does induce that reliance, and enforcement is necessary to avoid injustice. Unlike traditional estoppel, the doctrine addresses reliance on a promise about future conduct rather than a misrepresentation of existing or past fact.

Although New Jersey had not previously applied the doctrine in this precise setting, the state's highest court had indicated that it could apply in appropriate circumstances. The Appellate Division saw no principled reason to deny protection to substantial reliance on a future promise when similar reliance on representations of present or past fact may be protected.

The court adopted the line of cases typified by Drennan v. Star Paving Co. A subcontractor soliciting a general contractor's business has reason to expect, and an interest in having, the general contractor use its bid to secure the prime contract. Once the general contractor becomes bound on its own bid in reliance on the subcontractor's terms, fairness can require giving the contractor an opportunity to accept the subcontractor's bid.

The court agreed that, when a subcontractor's own carelessness causes an erroneous bid, the resulting loss should ordinarily fall on the subcontractor rather than on a general contractor that relied on the bid in good faith. The court expressly did not decide whether the existence of UCC section 2-205 limits reliance on promissory estoppel for offers that fail to satisfy the statute.

Gordon had to prove a clear and definite offer, Coronis's reasonable expectation of substantial reliance, Gordon's actual and reasonable reliance, and resulting detriment. Those elements are principally factual and therefore unsuitable for disposition by summary judgment on this record.

The April 22 letter was sent after Gordon had submitted its bid to the Port Authority, so that letter alone could not have induced Gordon's original bid. Gordon instead alleged that the letter merely confirmed an earlier oral agreement or bid. A full hearing was necessary to determine whether that earlier offer existed and what its terms were.

Whether Coronis could reasonably expect Gordon to rely on its bid depended on Coronis's actual knowledge and on construction-trade custom and usage. Gordon also had to prove that it in fact relied on Coronis's figure. Further, reliance would not be reasonable if Coronis's quote was so low that it should have alerted Gordon to an error.

Finally, Gordon had to prove detriment, including the claimed additional cost of obtaining substitute structural-steel work. Since the record did not resolve these factual questions, the Law Division's summary judgment could not stand.