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James Baird Co. v. Gimbel Brothers, Inc.

James Baird Co. v. Gimbel Brothers, Inc.

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Published by: crlstinaaa on Apr 08, 2008
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11/13/2012

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Case: James Baird Co. v Gimbel Brothers, Inc. (1933) 381-383 - US Court ofAppeals, 2nd Circuit, Judge HandParties: Plaintiff - Baird (offeree, contractor)Defendant - Gimbel (offeror, linoleum supplier)Procedural History: Lower court found for defendant. Plaintiff appeals.Facts: Dept of Highways in PA was accepting bids from contractors for theconstruction of a public building. Gimbel was a linoleum seller, and had anemployee compute the amount of linoleum necessary for the construction, but therewas an error, and the amount computed was only half of what was actually neededfor the job. Before they found out about this mistake, Gimbel sent out offers tocontractors who would probably bid on the job.Dec 24th - Gimbel sent out the offer
Dec 28th, in the following order:
§ Baird rec'd the offer§ Gimbel learned of their mistake, and telegraphed all contractors towhom it had sent an offer that they withdrew that offer and would re-issue anotherfor double the amount§ Baird put in a bid for the job, depending on the price offered byGimbel§ Baird found out about Gimbel's errorDec 30th, Baird's bid was accepted
Dec 31st, Gimbel confirmation letter of withdrawal was rec'd by Baird
Jan 2, Baird formally accepted Gimbel offer
When Gimbel would not recognize the existence of a contract, Baird sued for breachof contract.Issue: Did plaintiff's reliance on offer make it a binding contract?Holding: Not binding, because no consideration. Affirmed for defendant.Reasoning: Gimbel had withdrawn their offer before Baird could accept. Bairdhad argued that his placing a bid was in effect acceptance because of the languagein Gimbel's offer, "if successful in being awarded this contract, it will beabsolutely guaranteed,[… and] prompt acceptance after the general contract hasbeen awarded." Court says no, there would not have been a contract until Bairdaccepted Gimbel's offer to sell the linoleum after Baird was awarded the generalcontract. So no contract. Plaintiff also argues promissory estoppel, but courtsays if there is an offer, but no consideration, then there is no promissoryestoppel, even if there was reliance. Promissory estoppel is usually reserved forcontracts of a donative nature (unilateral contracts; gifts), not in a situationwhere there is a bargained-for exchange. Court says promissory estoppel will notbe applied in cases where there is an offer for exchange, as the offer is notintended to become a promise until consideration is received.NotesCourt says offer was withdrawn before it was accepted.Plaintiff pleading in the alternative, if they lose on contract theory, they willtry to win on promissory estoppel.Gimbel's offer said "to supply all the linoleum required by the specs at twodifferent lump sums"Gimbel's asked for a bidOffer conditioned on communication of assent. Doesn’t become a contract without

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