Relief From Bid

Thomas R. Yocum, Esq.

Bidders on construction projects (whether they be a prime contractor or subcontractor) may on occasion seek relief to avoid being required to enter into a contract based upon a submitted bid.  The reason for seeking relief could be a mathematical or clerical error, an error in judgment, an extended delay in acceptance of the bid, escalation of labor or material prices, or some other reason.

A bidder can legally avoid being forced to enter into a contract based upon a bid in certain circumstances.  The legal excuse may be based upon qualifications contained in the bid itself.  For example, the bid may require that it be accepted within a specified number of days (e.g. 30, or 60 days), may specify utilization of a particular contract form (e.g. AIA Documents), or contain some other contingency.  If the bid is expressly qualified upon certain contingencies being met, the bidder cannot be required to enter into a contract absent fulfillment of the contingencies.

Specific statutory procedures exist for withdrawing bids which were made in error.  Ohio Revised Code §9.31 provides for the right to withdraw a bid within two business days after conclusion of the bid opening procedure where, "the reason for the price bid being substantially lower was a clerical mistake as opposed to a judgment mistake, and was actually due to an unintentional and substantial arithmetic error or an unintentional omission of a substantial quantity of work, labor, or material made directly in the compilation of the bid."  The notice of claim of right to withdraw the bid must be made in writing and filed with the contracting authority within two business days after the bid opening.  See also, Cincinnati Ordinance Section 321-49 which provides a similar procedure for a bid not requiring bid surety within four business days from the date of bid opening. 

Case law in Ohio has bound subcontractors to honor bids made to a general contractor based upon principles of promissory estoppel, even though the general contractor was not contractually bound to accept the subcontractor's bid.  This creates a one way street where a general contractor who relied on a subcontractor's bid in formulating a proposal to the owner has the option to utilize the subcontractor's bid which could be enforced by a promissory estoppel action, but on the other hand, the subcontractor cannot force the general contractor to accept the bid of the subcontractor even though it was utilized in preparing the prime bid to the owner.

Utilization of the promissory estoppel principle to enforce subcontractor bids was eroded by the Franklin County Court of Appeals decision in Complete General Construction v. Kard Welding, Inc., 182 Ohio App.3d 119 (2009) wherein the Court held that enforcement of a subcontractor bid through promissory estoppel may be avoided where the general contractor did not rely on the bid, failed to accept the bid within a reasonable time, or the general contractor engaged in bid shopping, or made a counter-offer. 

Whether relief from a bid is appropriate is a highly fact sensitive question with one of the key facts being whether the bid is submitted on a public or private project.  Further, whether there will be an entitlement to relief from the bid may depend upon whether proper action is immediately taken.  Where a mistake is made in a private bid, the party receiving the bid cannot knowingly take advantage of the mistake.  Where one bid is extremely low compared to other bids, this should set off alarms prompting inquiry as to the reason for disparity in bid amounts.

Thomas R. Yocum, Esq., CSI, Benjamin, Yocum & Heather, LLC, 300 Pike Street, Suite 500, Cincinnati, Ohio 45202 (513) 721-5672. www.byhlaw.com