Case: James Baird Co. v Gimbel Brothers, Inc.

(1933) 381-383 - US Court of Appeals, 2nd Circuit, Judge Hand Parties: Plaintiff - Baird (offeree, contractor) Defendant - Gimbel (offeror, linoleum supplier) Lower court found for defendant. Plaintiff appeals.

Procedural History:

Facts: Dept of Highways in PA was accepting bids from contractors for the construction of a public building. Gimbel was a linoleum seller, and had an employee compute the amount of linoleum necessary for the construction, but there was an error, and the amount computed was only half of what was actually needed for the job. Before they found out about this mistake, Gimbel sent out offers to contractors 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 to whom it had sent an offer that they withdrew that offer and would re-issue another for double the amount § Baird put in a bid for the job, depending on the price offered by Gimbel § Baird found out about Gimbel's error ○ Dec 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 breach of contract. Issue: Holding: Did plaintiff's reliance on offer make it a binding contract? Not binding, because no consideration. Affirmed for defendant.

Reasoning: Gimbel had withdrawn their offer before Baird could accept. Baird had argued that his placing a bid was in effect acceptance because of the language in Gimbel's offer, "if successful in being awarded this contract, it will be absolutely guaranteed,[… and] prompt acceptance after the general contract has been awarded." Court says no, there would not have been a contract until Baird accepted Gimbel's offer to sell the linoleum after Baird was awarded the general contract. So no contract. Plaintiff also argues promissory estoppel, but court says if there is an offer, but no consideration, then there is no promissory estoppel, even if there was reliance. Promissory estoppel is usually reserved for contracts of a donative nature (unilateral contracts; gifts), not in a situation where there is a bargained-for exchange. Court says promissory estoppel will not be applied in cases where there is an offer for exchange, as the offer is not intended to become a promise until consideration is received. Notes Court says offer was withdrawn before it was accepted. Plaintiff pleading in the alternative, if they lose on contract theory, they will try to win on promissory estoppel. Gimbel's offer said "to supply all the linoleum required by the specs at two different lump sums" Gimbel's asked for a bid Offer conditioned on communication of assent. Doesn’t become a contract without

such communication. For the subcontractor to rely in this manner on the linoleum bid was unreasonable. (2nd circuit - NY relies on 2nd circuit)