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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

CHAPTER 2 OFFERS; CREATION AND DURATION OF POWER OF ACCEPTANCE

1-2 Corbin on Contracts § 2.31

§ 2.31 N1 Effect of Action in Reliance That Is Not Part Performance

[Go To Supp]

There are cases holding that action by the offeree in reliance on the offered promise does not make it irrevocable if such action is not part performance of the exchange requested by the offeror. Expense incurred in preparation to render the requested performance or in investigating whether or not it is desirable to accept the offer are, under these holdings, not sufficient to prevent effective revocation or to make a revocation wrongful.n2 The reasoning of these cases has largely been disapproved, inasmuch as the courts are now holding that a promise is made enforceable by substantial and definite action in reliance, if that action is reasonable and such as the promisor had reason to foresee as the result of the promise. Surely, one who offers a promise in return for a requested performance in exchange has reason to foresee that the offer may cause part performance.n3 The offeror may equally foresee that the offeree will make expenditures in preparation to render the requested performance. In many such cases, the offer should be held to have become irrevocable, as that term is explained herein. In order to make a promise binding, action in reliance does not have to be part of a requested consideration. Indeed, promises to make a gift, no consideration of any kind being contemplated, may become enforceable by reason of action in reliance upon them.n4 The approach discussed here is codified in the United Nations Convention on Contracts for the International Sale of Goods, § 16(2)(b), which provides: ''[A]n offer cannot be revoked: ... if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.''n5

If the action by the offeree is not part performance of the requested consideration and also is not such action as the offeror had reason to foresee as the result of the offer, it will not make the offer irrevocable in any sense. One who makes an offer to a contract normally has no reason to foresee that the offeree will take any action or inaction in reliance upon the offer, other than part performance of an act requested by the offeror.n6

Often, however a subcontractor (or supplier) may submit a bid to a general contractor for the purpose of the latter's using it, as the bidder knows or hopes, in determining the amount of a bid to be made on a larger general contract. When made, the bid is, of course, a revocable offer, but after the subcontractor's bid has been so used, and the general contractor's bid has been accepted, binding the general contractor to perform in accordance with it, many cases have held that the bid has become irrevocable even though the subcontractor has as yet received no notice of acceptance.n7 The facts of these cases are not identical and must be weighed separately in determining the just decision.n8 The fact that the subcontractor's bid is oral (often by telephone) does not diminish the reasonableness of the general contractor's reliance.n9 Because there is no requirement of mutuality of obligation, it does not follow that the subcontractor whose bid has been used in calculating the general contractor's bid can hold the general contractor to contractual liability.n10 Use of the bid is not an acceptance. A request for bids is not a commitment to accept the lowest bid.n11 This one-sided relationship puts the general contractor in a position of dominance. For this reason, it is generally agreed that the general contractor cannot, after being awarded the contract, reopen the bidding with the subcontractors to chisel down the bids, while at the same time maintaining that the low-bidding subcontractor remains liable.n12 Terms of opprobrium such as bid shopping and bid chiseling are used to label such conduct. Moreover, the offer, although irrevocable, remains open only for a reasonable time. Also, the general contractor who unduly delays notifying the subcontractor of acceptance cannot bind the subcontractor.

The general contractor's reliance on merely an estimate will not generally be reasonablen13 nor can the general contractor rely on a bid that is so palpably low as to indicate that it was based on a mistake.n14 In short, the reliance must be reasonable.n15

The Restatement (Second) of Contracts § 87(2) states a rule of far broader scope than the subcontracting cases. It provides: ''An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.'' In Spitzli v. Guth, n16 a landowner gave a lessee an ''option,'' without consideration, to purchase real property on specified terms. In reliance on the offer, the lessee expended, as the lessor knew the lessee was planning, some $5,000 in making improvements on the land. The lessor's attempt to revoke the offer was ineffective. Although the court purported to find consideration, it is quite clear that the irrevocability of the offer was a consequence of the heavy expenditures in reliance upon the offer.n17 The very term ''option'' creates a reasonable expectation of irrevocability, consideration, in the context of option contracts, being merely an obsolescent historical blot on our legal system. The buyers had a reasonable belief the offer was irrevocable, as the seller should have known.

In Coffman Industries, Inc. v. Gorman-Taber Co., n18 a general contractor defaulted and a surety company began to pay suppliers and subcontractors. The surety refused to pay Gorman-Taber, a subcontractor, because it had refused to pay for some goods received from Coffman, a supplier, that had been damaged in transit. The surety, however, promised to pay Gorman-Taber when and if it arranged a settlement with Coffman, which had sued Gorman-Taber, the general contractor and the surety. The claim was settled by payments made to Coffman by Gorman-Taber and the insurer of a common carrier. However, before the settlement was made final, the surety purported to revoke its offer to pay Gorman-Taber, its obligation on the bond having expired by the passage of time. The court held the offer to be irrevocable. While it cited § 49 [2.29] of this treatise and § 45 of the Restatement dealing with part performance under an offer to a unilateral contract, it clearly recognized that reliance on the offer was the thrust of its rationale for finding the offer irrevocable.

In Rios v. Altamont Farms, Inc., the issue was whether certain default judgments entered in Puerto Rico were entitled to full faith and credit in New York. This, in turn, was dependent upon whether Puerto Rico had sufficient contacts with the New York defendants as to justify the exercise of jurisdiction over them. It was held that the judgments were entitled to full faith and credit. The prevailing opinion stated: ''These preliminary steps, including the making of commitments, obtaining medical and police clearances, advancing the costs of air transport and actual embarkation, constituted either part performance or foreseeable detrimental action in reliance so as to have made defendants''offers [of employment] irrevocable and legally binding before any plaintiff set foot in New York.''n19

In American Handkerchief Corp. v. Frannat Realty Co., n20 a lessor signed a document (without consideration) purporting to give the tenant an option to renew, on stated terms, ''in the event of a bona fide and approved sublease by the tenant.'' In reliance on this, the tenant secured a subtenant for part of the building, but failed to notify the lessor of this or to obtain the lessor's approval. The court held that the lessor's notice of revocation was effective; quoting this section and citing § 49-51 [2.29-2.31]. The court said: ''the defendant had no reason to expect that the plaintiff would enter into a binding sublease prior to obtaining its approval of the new subtenants and subleases, so it cannot be said that the plaintiff's change of position here made the offer irrevocable.'' Moreover, even if the option had been accepted, the right to a renewal was expressly conditional on the lessor's approval, a condition that was not fulfilled. The decision is consistent with Restatement (Second) of Contracts, § 45, 87(2) & 90.

At times, courts have indulged in a fiction that action in reliance on, or part performance of, an offer creates an implied promise by the offeree making the relationship a bilateral contract. Realizing that it is inequitable to allow an offeror to revoke after part performance by the offeree, but supposing that neither party can be bound unless both parties are bound, courts have been very ready to find that the rendering of part performance is an acceptance that implies a promise to perform the balance.n21 The contract so made is then described as bilateral, so that a subsequent notice of revocation is too late to be effective. If the implication of a return promise by the offeree is reasonable and in accord with the terms of the offer, the reasoning and decision of the court are not open to criticism.n22 But it may be that the implication of such a promise is a pure fiction and solely for the purpose of holding revocation to be ineffective. To indulge in such a fiction when it is contrary to the fact is wholly unjustifiable unless the result of it is one that ought to be reached without it. In the present instance the result is desirable and correct. However, it is the part performance or other action in reliance that makes the offer irrevocable and not the fictitious promise of the offeree to render the requested performance. The fiction is one of many fallacies that derive from the attempt to force all of contract law into the mold of promise.

Legal Topics:

For related research and practice materials, see the following legal topics:

Contracts LawSales of GoodsForm, Formation & ReadjustmentFormationOffer & AcceptanceContracts LawFormationAcceptanceMethods of AcceptanceGeneral OverviewContracts LawTypes of ContractsBilateral ContractsContracts LawTypes of ContractsUnilateral ContractsGeneral Overview

FOOTNOTES:

(n1)Footnote 1. Includes material covered in § 52 of the prior edition: ''Fiction of an Implied Promise Making the Contract Bilateral.''

(n2)Footnote 2.

U.S. - Sucrerie Central Coloso v. Fajardo, 248 Fed. 432 (1st Cir.1918) .

Ill. - Corbett v. Cronkhite, 239 Ill. 9, 87 N.E. 874 (1909) , expense incurred, and offer under seal.

Iowa -An order for goods is not made irrevocable by the fact that the offeree paid the soliciting agent a commission on the order, when offeree had neither shipped the goods nor started a notice of acceptance. Doll & Smith v. A. & S. Sanitary Dairy Co., 202 Iowa 786, 211 N.W. 230 (1926) .

N.Y. - Ganss v. Guffey Petroleum Co., 125 App.Div. 760, 110 N.Y.S. 176 (1908) .

Ohio - Bretz v. Union Central Life Ins. Co., 134 Ohio St. 171, 16 N.E.2d 272, 11 Ohio Op. 587 (1938) .

Tex. - Texas Co. v. Dunn, 219 S.W. 300 (Tex.Civ.App.1920) , one to whom land was offered paid $25 for examination of title.

Wash. - Brown Brothers Lumber Co. v. Preston Mill Co., 83 Wash. 648, 145 P. 964 (1915) .

(n3)Footnote 3. See § 2.29, 2.30 above.

(n4)Footnote 4. Restatement (Second) of Contracts § 90.

See note herein under § 263 to McPhail v. L.S. Starrett Co., 257 F.2d 388 (1st Cir.1958) , a case in which the defendant gave a stock purchase option to its employees on favorable terms, requesting no agreed equivalent, but hoping for and receiving continuance in service by the employees in reliance on the promise.

In Ray-Hof Agencies, Inc. v. Petersen, 123 So.2d 251 (Fla.1960) , the plaintiff received an offer of employment from Atlanta and at once gave up his job in Florida and started for Atlanta. The court held that, while the worker's action in Florida might have made the defendant's offer of employment irrevocable (Restatement, Contracts, § 45), it did not consummate an employment contract in Florida, without which the Florida Worker's Compensation Act was not applicable. If the defendant's offer, made irrevocable by the worker's action in Florida, be regarded as a unilateral contract, the court thought that this contract was merely ''an implied subsidiary or collateral promise that if part of the requested performance is given the offeror will not revoke his offer and that if tender is made it will be accepted.'' This ''subsidiary'' contract would not be a ''contract of employment'' made in Florida. The suggestion of such an ''implied subsidiary'' contract that is made in the Comment to Restatement, Contracts, § 45, is of doubtful value.

See Chapters 8 and 9, Informal Contracts Without Assent or Consideration.

(n5)Footnote 5. For the background of, and commentary on, this provision, see John O. Honnold, Uniform Law for International Sales Under the 1980 Convention 140-146 (1987).

(n6)Footnote 6.

Mo. - Sharp Bros. Contracting Co. v. Commercial Restoration, Inc., 334 S.W.2d 248 (Mo.App.1960) , subcontractor's ''quotation'' on cement work was expressly ''subject to acceptance within 10 days''; contractor's attempt to accept later was ineffective.

It is on the reasoning stated in the text that the decision in Petterson v. Pattberg, 248 N.Y. 86, 161 N.E. 428 (1928) , is to be supported if it can be approved at all. A mortgagee offered to accept a sum, less than the debt secured, in full payment, provided that it should be paid by a specified date before maturity. The mortgagor raised the money, probably by some effort and sacrifice, and came to the mortgagee's door and knocked. The mortgagee asked who was there and was told ''It is Petterson. I have come to pay off the mortgage.'' The mortgagee at once replied that he had already sold the mortgage and could not receive payment. Not until thereafter was a tender of the money actually made. The mortgagor's raising of the money and bringing it to the door was action in reliance, but it was not part performance, being neither payment nor part payment.

Ala. - McKenzie v. Stewart, 196 Ala. 241, 72 So. 109 (1916) , is similar to Petterson v. Pattberg, except that the mortgagor's action in reliance was the making of a sale of the land for 30 shares of stock in order to obtain the 15 shares of the stock that the mortgagee had promised to accept in discharge of the mortgage and also the actual tender of the 15 shares. Specific performance by the mortgagee was rightly enforced.

Ga. - Siegel v. Codner, 153 Ga.App. 438, 265 S.E.2d 287 (1980) , aff'd, 246 Ga. 368, 271 S.E.2d 465 . The defendant offered to accept less than the face amount of a mortgage indebtedness provided it was paid in 60 days. Under Georgia law, an accord and satisfaction whereby the debtor pays less than the full amount due is binding if payment is actually made. Before the expiration of the sixty days Turner Communications agreed to purchase the premises. Defendant revoked the offer. The court ruled that summary judgment for the defendant was improper. There may have been a bilateral contract for a consideration. Alternatively, the offerees may have ''partially performed by efforts to satisfy the conditions.'' Since performance was to be payment, and no part payment had been made, it seems that the court is ruling that actions in reliance upon the offer may have made it irrevocable.

Ohio - Bretz v. Union Central L. Ins. Co., 134 Ohio St. 171, 16 N.E.2d 272 (1938) , is similar to Petterson v. Pattberg.

(n7)Footnote 7.

U.S. - Montgomery Indus. Int'l, Inc. v. Thomas Constr. Co., Inc., 620 F.2d 91 (5th Cir.1980) (Texas law); Air Conditioning Co. of Hawaii v. Richards Constr. Co., 200 F.Supp. 167 (D.Hawaii 1961) , aff'd, 318 F.2d 410 (9th Cir.) , following Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757 (1958) and applying Restatement, Contracts, § 45, § 90, affirmed on other grounds, sub nom. Richards Constr. Co. v. Air Conditioning Co. of Hawaii, 318 F.2d 410 (9th Cir.1963) . James Baird Co. v. Gimbel Bros., 64 F.2d 344 (2d Cir.1933) , is to the contrary in its reasoning although distinguishable because the bid was revoked prior to the award of the general contract.

Alaska - Alaska Bussell Electric Co. v. Vern Hickel Constr. Co., 688 P.2d 576 (Alaska 1984) . This rationale was restated in George Crook et al. Investment & Development, Inc. v. Mortenson-Neal, 727 P.2d 297 (Alaska 1986) although there appeared to be an acceptance of the subcontractor's bid.

Ark. - Jackson County Grain Drying Co-op. v. Newport Wholesale Electric, Inc., 9 Ark.App. 41, 652 S.W.2d 638 (1983) .

Cal. -In Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757 (1958) , the plaintiff, when preparing his bid for the total construction of a large building, requested the defendant to submit a bid as a subcontractor for the necessary paving work. The plaintiff was required in his own general bid to name his subcontractors. The defendant bid $7,131; and this bid being the lowest, was used by the plaintiff in determining the total amount of his own bid. The defendant said nothing as to his bid's being revocable or otherwise, but it was not a mere ''estimate,'' and he had reason to know that it would be used by the plaintiff. The plaintiff's general bid was accepted; and the next morning he stopped at the defendant's office to notify him. At once, however, the defendant told him that the bid was based on a mistake and that he would not do the work for less than $15,000. The plaintiff, after making reasonable efforts to find a substitute subcontractor, was obliged to pay $10,948 for the work. The court held, with a thoroughly reasoned opinion, that the defendant's bid was made irrevocable by the plaintiff's substantial action in reliance, action that the defendant had reason to foresee, even though that action was not any part of the agreed equivalent requested as consideration for the defendant's promise to do the work. (That consideration was $7,131.) The court cited § 194 of this treatise; and it cited and applied Restatement, Contracts, § 45 and 90. After discussing with approval Restatement, Contracts, § 45, and the comment thereon as to the implication of a promise not to revoke an offer after part of the agreed equivalent has been performed, the court said: ''Whether implied in fact or law, the subsidiary promise serves to preclude the injustice that would result if the offer could be revoked after the offeree had acted in detrimental reliance thereon. Reasonable reliance resulting in a foreseeable prejudicial change in position affords a compelling basis also for implying a subsidiary promise not to revoke an offer for a bilateral contract.'' The cause of the defendant's alleged ''mistake'' does not appear; but the plaintiff had no reason to know that such mistake existed. He had changed his position in good faith and could not be put in status quo except by awarding as damages the difference between the amount of the defendant's bid and the amount that the plaintiff had to pay for the work. With this case compare the cases cited under § 200, 206.

In Norcross v. Winters, 209 Cal.App.2d 207, 25 Cal.Rptr. 821 (1962) , the Drennan case is followed. The defendant's bid was low; but the plaintiff had no reason to know that it was by mistake. In Saliba-Kringlen Corp. v. Allen Engineering Co., 15 Cal.App.3d 95, 92 Cal.Rptr. 799 (1971) , the subcontractor notified the general contractor of the mistake 10 minutes prior to the opening of the bids. The general contractor was justified in not revoking its bid.

D.C. - Solway Decorating Co., Inc. v. Merando, 264 A.2d 501 (D.C.App.1970) .

Ill. - Illinois Valley Asphalt, Inc. v. J.F. Edwards Constr. Co., 90 Ill.App.3d 768, 45 Ill.Dec. 876, 413 N.E.2d 209 (1980) .

Ind. - Lyon Metal Products, Inc. v. Hagerman Constr. Corp., 181 Ind.App. 336, 391 N.E.2d 1152 (1979) .

Ky. - Harry Harris, Inc. v. Quality Constr. Co., 593 S.W.2d 872 (Ky.App.1979) .

La. -See Harris v. Lillis, 24 So.2d 689 (La.App.1946) (bid held to be irrevocable pursuant to local custom).

N.J. - E.A. Coronis Assoc. v. M. Gordon Constr. Co., 90 N.J.Super. 69, 216 A.2d 246 (App.Div.1966) .

N.M. -Standing relatively alone is Tatsch v. Hamilton-Erickson Mfg. Co., 76 N.M. 729, 418 P.2d 187 (1966) , holding that a general contractor's reliance on a bid does not make it irrevocable.

N.Y. ; Mo.- James King & Son, Inc. v. DeSantis Constr. No. 2 Corp., 97 Misc.2d 1063, 413 N.Y.S.2d 78 (1977) . There was an oral acceptance; nonetheless, the court applied a promissory estoppel rationale. This case relied on Debron Corp. v. National Homes Constr. Co., 493 F.2d 352 (8th Cir.1974) (Mo. law), which also could have been decided as a simple case where the general contractor accepted the subcontractor's bid.

Minn. - Constructors Supply Co. v. Bostrom Sheet Metal Works, Inc., 291 Minn. 113, 190 N.W.2d 71 (1971) .

Ohio - Wargo Builders, Inc. v. Douglas L. Cox Plumbing & Heating, Inc., 26 Ohio App. 2d 1, 268 N.E.2d 597 (1971) .

Pa. - Hedden v. Lupinsky, 405 Pa. 609, 176 A.2d 406 (1962) , noted under § 200.

S.C. - Powers Constr. Co. v. Salem Carpets, Inc., 283 S.C. 302, 322 S.E.2d 30 (1984) .

S.D. - Northwestern Engineering Co. v. Ellerman, 69 S.D. 397, 10 N.W.2d 879 (1943) was the seminal case, the extension of which was a basis of California's Drennan decision. Here there was a bilateral express agreement that if the general contractor was awarded the general contract, it would accept the subcontractor's offer and the subcontractor would do the work. The agreement was wanting in consideration because the general made no promise to bid for the general contract.

Utah -See R.J. Daum Constr. Co. v. Child, 122 Utah 194, 247 P.2d 817 (1952) .

Wash. - Arango Constr. Co. v. Success Roofing, Inc., 46 Wash.App. 314, 730 P.2d 720 (1986) .

Wis. - Janke Constr. Co. v. Vulcan Materials Co., 386 F.Supp. 687 (W.D.Wis.1974) , aff'd, 527 F.2d 772 (7th Cir.)

A strong contrarian opinion is expressed in Margaret Kniffin, Innovation or Aberration: Recovery for Reliance on a Contract Offer, as Permitted by the New Restatement (Second) of Contracts, 62 U.Det.L.Rev. 23 (1984).

(n8)Footnote 8. In N. Litterio & Co. v. Glassman Const. Co., 319 F.2d 736 (1963) , the defendant Litterio submitted a bid as a subcontractor to Glassman who became prime contractor on a building. Glassman told Litterio that its bid seemed low and asked that it be rechecked. This was done and the bid was confirmed. Glassman then told Litterio that its bid would be used in determining the prime bid. On obtaining the prime contract, Glassman sent to Litterio a written contract draft containing some provisions not consistent with the latter's bid and requesting signature and return within 10 days. Litterio did not sign and refused to perform, having concluded that its bid was too low. The court reviewed the Drennan and other cases and distinguished them. Glassman's action was not clearly an acceptance, if the bid was an offer. The instrument it submitted to Litterio was clearly a counter-offer and no bilateral contract resulted. The court left open the question whether Glassman had so acted in reliance on the bid as to make the rule of Restatement, Contracts § 90, applicable. The fact of Glassman's counteroffer bears against a finding of such reliance. The court holds that summary judgment would be inappropriate on the facts.

In Preload Technology, Inc. v. A.B. & J. Constr. Co., Inc., 696 F.2d 1080 (5th Cir.1983) (Texas law), the general contractor accepted the offer on the letterhead of a different corporation (Preload Company) than the one that had solicited the bid (Preload Technology). The subcontractor, when refusing to perform, did not make this fact an issue. If there was no contract by a process of offer and acceptance, there was one by promissory estoppel.

(n9)Footnote 9. See Hoel-Steffen Constr. Co. v. United States, 684 F.2d 843, 847-849, 231 Ct.Cl. 128 (1982) (collecting cases). In H.B. Alexander & Son, Inc. v. Miracle Recreation Equipment Co., 314 Pa.Super. 1, 460 A.2d 343 (1983) , the bidder was a supplier. It was held that the telephone bid was binding despite the U.C.C. statute of frauds. Telephone bidding was the usage of the trade. ''waiving'' the statute. Note that the bid was in fact accepted prior to its withdrawal.

(n10)Footnote 10.

U.S. - Seacoast Elec. Co. v. Franchi Bros. Constr. Corp., 437 F.2d 1247 (1st Cir.1971) .

Ala. -In Southeastern Sand & Gravel Co. v. Newell Roadbuilders, Inc., 282 Ala. 431, 212 So.2d 598 (1968) , post bid discussions between the parties showed that neither party understood there was a contract.

Ariz. - Corbin-Dykes Electric Co. v. Burr, 18 Ariz.App. 101, 500 P.2d 632 (1972) . The sub-contractor sought to prove that there was a custom by which contractors would accept bids upon which they had relied. The court ruled, erroneously it is believed, that custom and usage cannot establish a contract. Compare Washington, below.

Cal. - Southern California Acoustics Co. v. C.V. Holder, Inc. 71 Cal.2d 719, 79 Cal.Rptr 319, 456 P.2d 975 (1969) ; Norcross v. Winters, 209 Cal. App. 2d 207, 25 Cal. Rptr. 821 (1962) .

Idaho - Mitchell v. Siqueiros, 99 Idaho 396, 582 P.2d 1074 (1978) .

Ky. - Finney Co., Inc. v. Monarch Constr. Co., Inc., 670 S.W.2d 857 (Ky.1984) .

Mass. - Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 384 N.E.2d 176 (1978) (court holds alternatively that the offer may have been accepted on conventional offer and acceptance principles.)

N.Y. - Cortland Asbestos Products, Inc. v. J. & K. Plumbing & Heating Co., 33 A.D.2d 11, 304 N.Y.S.2d 694 (1969) .

Minn. - Holman Erection Co. v. Orville E. Madsen & Sons, Inc., 330 N.W.2d 693 (Minn.1983) . ''In contrast, the subcontractor does not rely on the general and suffers no detriment. A subcontractor submits bids to all or most of the general contractors that it knows are bidding on a project. The subcontractor receives invitations to bid from some generals and submits bids to others without invitation. The time and the expense involved in preparing a bid is not segregated to any particular general. Thus, whether or not a particular general wins the contract is of little or no concern to the subcontractor. The subcontractor engages in the same work and expense in preparing its bid regardless of who wins the general contract and whether the subcontractor wins the contract on which it bid. No further expense is incurred until a formal agreement is reached with the general and actual work commences. Clearly the promissory estoppel concept is not applicable in this situation. With no detrimental reliance there can be no estoppel claim. Ample justification exists for binding the subcontractor and not binding the general. The two situations are very different.''

Wash. -See Milone & Tucci, Inc. v. Bona Fide Builders, 49 Wash.2d 363, 301 P.2d 759 (1956) , holding that a prime contractor, who had requested and received a bid on a part of the work from the plaintiff, did not accept it and become bound by a subcontract by merely using the plaintiff's bid in the process of making his bid on the contemplated larger contract with a third party. See also § 2.3, § 200. But in Industrial Electric-Seattle, Inc. v. Bosko, 67 Wash.2d 783, 410 P.2d 10 (1966) , it was proved to the satisfaction of the trial court that there was a trade usage to the effect that the general contractor must use the subcontractor whose bid was relied upon. This was affirmed.

In Merritt-Chapman & Scott Corp. v. Gunderson Bros. Engineering Corp., 305 F.2d 659 (9th Cir.1962) , the court followed Milone & Tucci as to Washington law; but the prime contractor had merely named the plaintiff as a subcontractor in its bid on the principal contract, with respect to matters quite different from those covered by the subcontractor's bid to the prime contractor. The action of the prime contractor in this case was certainly not an ''acceptance'' of the subcontractor's bid enabling the subcontractor to maintain action for breach of contract. Furthermore, it is clear that its action was not such action in reliance on the subcontractor's bid as would support an action against the subcontractor for breach. See also § 200.

A statute may command that the general contractor deal with the subcontractor whose bid was used in the general's calculation. See Southern Cal. Acoustics Co. v. C.V. Holder, Inc., 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975 (1969) ; Watkins v. Board of Regents, 414 So.2d 583 (Fla.App.1982) .

(n11)Footnote 11. St. Luke's Hospital v. Midwest Mechanical Contractors, Inc., 681 S.W.2d 482 (Mo.App.1984) . Here the hospital searched for contractors that were large enough to handle a major project and invited them to bid. This invitation did not carry with it a promise to accept the lowest bid.

(n12)Footnote 12. Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757, 760 (1958) ; Preload Technology, Inc. v. A.B. & J. Constr. Co., Inc., 696 F.2d 1080 (5th Cir.1983) (Texas law). Literature on bidding and bargaining practices in the construction industry include, Michael L. Closen & Donald G. Weiland, The Construction Industry Bidding Cases: Application of Traditional Contract, Promissory Estoppel, and Other Theories to the Relations between General Contractors and Subcontractors, 13 J. Marshall L.Rev. 565 (1980); Franklin M. Schultz, The Firm Offer Puzzle: A Study of Business Practices in the Construction Industry, 19 U.Chi.L.Rev. 237 (1952); Comment, 34 Emory L.J. 421 (1985); Note, 53 Va.L.Rev. 1720 (1967).

(n13)Footnote 13. Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654 (7th Cir.1941) ; Leo F. Piazza Paving Co. v. Bebek & Brkich, 141 Cal.App.2d 226, 296 P.2d 368 (1956) .

(n14)Footnote 14.

U.S. - Chernick v. United States, 372 F.2d 492, 178 Ct. Cl. 498 (1967) (court's adjustment of the bid was most unusual); Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654 (7th Cir.1941) .

Cal. - Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757 (1958) (dictum). In C & K Engineering Contractors v. Amber Steel Co., Inc., 23 Cal.3d 1, 151 Cal.Rptr. 323, 587 P.2d 1136 (1978) , the subcontractor was notified that its bid was substantially below its competitor's bids. Nonetheless, it reiterated its bid. Reliance was justified.

15. See note 15 on page 293.

Ill. - S.N. Nielsen Co. v. National Heat & Power Co., 32 Ill.App.3d 941, 337 N.E.2d 387 (1975) .

Utah - Tolboe Constr. Co. v. Staker Paving & Constr. Co., 682 P.2d 843 (Utah 1984) . The general contractor was not justified in relying on a bid that was 290% lower than the next lowest bid. Although the general asked the subcontractor to check its bid, it did not indicate the apparent error.

(n15)Footnote 15. In Haselden-Langley Constructors, Inc. v. D.E. Farr & Assocs., Inc., 676 P.2d 709 (Colo.App.1983) , the subcontractor submitted a bid for masonry. The general contractor unreasonably understood the bid to include in-wall insulation. The reliance was held to be unjustified.

(n16)Footnote 16. 112 Misc. 630, 183 N.Y.S. 743 (1920) .

(n17)Footnote 17. In Malmquist v. Peterson, 149 Minn. 223, 183 N.W. 138 (1921) , the holder of a three months' option was properly held to have a right to specific performance after a long period of years because of waiver, occupancy, payment of taxes, and making of improvements; and this in spite of the option giver's death and the objection of the heirs. The limited option had become irrevocable.

In Kucera v. Kavan, 165 Neb. 131, 84 N.W.2d 207 (1957) , an option to purchase, given to a tenant, was held to be irrevocable both because of a consideration of $1 and because the tenant had made extensive improvements in reliance on the option. The court again cited and approved Restatement, Contracts, § 90. See note under § 263.

By way of contrast, in Friedman v. Tappan Development Corp., 22 N.J. 523, 126 A.2d 646 (1956) , the owner gave the buyers a sixty day ''option,'' without consideration, to purchase some land. The buyers ordered an expensive title search which, according to the court, the offeror had no reason to believe would be made. The court found no estoppel. The court was a prisoner of obsolete reasoning. Because the buyers had a reasonable belief that the offer was irrevocable, it was neither unforeseeable nor unreasonable for the buyers to have made a title search.

In Berryman v. Kmoch, 221 Kan. 304, 559 P.2d 790 (1977) , the owner gave the broker an ''option'' to purchase, with a sham recital of consideration. The broker expended efforts in attempting to locate interested investors. When making preparations to accept, the broker learned from the land bank that the owner had sold to someone else. It was held that the efforts undertaken by the broker were not such as to justify a finding of irrevocability. Once again, the layman reasonably believes an offer describing itself as an option to be irrevocable. The fact that the recited token $10 was not paid does not change those reasonable expectations, upon which the offeree can reasonably rely. Perhaps here, the acts of reliance were not substantial enough to lead to a finding of irrevocability.

In Abbott v. Stephany Poultry Co., 44 Del. 513, 62 A.2d 243 (1948) , the defendant wrote promising to buy ''poultry grown by you'' at specified prices. No notice of acceptance was sent and no promise was made by the plaintiff; but, as defendant no doubt had reason to expect, the plaintiff bought and began feeding 7,000 baby chicks in reliance on the offer. This action was held sufficient to make the offer irrevocable, even though it was not a part of the performance that was bargained for. The judge said: ''As I interpret the agreement, the defendant was interested in the delivery of ''broilers''from time to time, not in the offeree's act of putting in baby ''chicks''for future delivery if, indeed, he thereafter chose to make delivery at all.'' After reviewing authorities, pro and con, the court said: ''After careful reflection I have concluded that a part performance of the terms of a unilateral offer affords the consideration necessary to support a binding contract. While to some extent disturbing the ancient principles of law applicable to unilateral offers, this result not only has the support of the weight of authority but also is in accord with common principles of justice. The degree of performance necessary to constitute a valid consideration must necessarily rest upon the facts of each case. Here, acting in reliance upon an unrevoked unilateral offer, Plaintiff purchased and put into houses 7,000 baby ''chicks''for future delivery to Defendant, thereby incurring a substantial detriment. I am of the opinion that this act constituted a part performance sufficient to convert the unilateral offer into a binding, bilateral agreement from which Defendant could not extricate himself by the subsequent revocations on October 13, 1945 and January 1, 1946.'' The court made no reference to Restatement, Contracts § 45, 90.

Today, the same result, with a different analysis would obtain under U.C.C. § 2-206. See § 2.32, 3.8 and 3.23 below.

(n18)Footnote 18. 521 S.W.2d 763 (Mo.App.1975) .

(n19)Footnote 19. This language is found in the dissenting opinion in the Appellate Division, adopted by the Court of Appeals. Rios v. Altamont Farms, Inc., 100 A.D.2d 405, 475 N.Y.S.2d 520, 527 (1984) , rev'd, 64 N.Y.2d 792, 486 N.Y.S.2d 913, 476 N.E.2d 312 , cert. denied, 473 U.S. 905, 105 S. Ct. 3529, 87 L. Ed. 2d 653 .

(n20)Footnote 20. 17 N.J. 12, 109 A.2d 793 (1954) .

(n21)Footnote 21.

Cal. - Los Angeles Traction Co. v. Wilshire, 135 Cal. 654, 67 P. 1086 (1902) .

Ga. -In Fontaine v. Baxley, Boles & Co., 90 Ga. 416, 17 S.E. 1015 (1892) , the defendant promised to fill all orders for cross-ties at a fixed price that the plaintiff could obtain in New York. Thereupon, as defendant expected and desired, plaintiff opened an office in New York, incurred expenses, and obtained orders. The defendant refused to fill some of these orders. The court held that the plaintiff had a right to damages for breach of contract. The court said: ''One of the objections urged to the third plea was the want of mutuality in the contract which that plea sets up and alleges. Grant that this objection would have been good if any question as to its binding force had arisen upon the contract before either party had partly performed it, yet after Fontaine had in pursuance of the agreement gone to New York and opened there the contemplated business, he had performed so far that it would be a fraud in the other party to repudiate the contract... The cases are numerous in which a mere proposition may be withdrawn before it is acted upon to the hurt of another, but cannot be withdrawn afterwards. Reducing this agreement to the rank of such a case as that, there would be no want of mutuality after Fontaine went to New York and opened business. And if this would serve to bind the other party to supply and deliver to Fontaine such cross-ties as he might sell in conducting his business, Fontaine would be equally bound to order and receive the whole of them from this particular party, to the exclusion of all others. While he did not expressly promise to do so, such was the fair import of the agreement, according to its tenor and spirit.''

In Blount v. Seckinger Realty Co., 167 Ga.App. 778, 307 S.E.2d 683 (1983) , an owner gave a broker an exclusive listing. The court ruled that, if the broker took some action by advertising or showing the property, the unilateral agreement would have become bilateral.

Kan. - Braniff v. Blair, 101 Kan. 117, 165 P. 816 (1917) .

Mo. - American Publishing & Engraving Co. v. Walker, 87 Mo.App. 503 (1901) .

(n22)Footnote 22.

U.S. - Hollidge v. Gussow, Kahn & Co., 67 F.2d 459 (1st Cir.1933) , is a case accepting the theory that an offer may be made irrevocable by beginning the requested performance.