Case: Parties


Drennan v Star Paving Co. (1958) 383-389 (CA Supreme Court) Plaintiff - Drennan (offeree, general contractor) Defendant - Star (offeror, subcontractor) Judgment for plaintiff, defendant appeals.

Procedural History:

Facts: Plaintiff Drennan was a contractor bidding on a construction job, and was accepting bids from subcontractors, so they could conclude a cost they could place the bid for. Defendant Star, a subcontractor, placed a bid for the paving work for $7,131.60, and this was confirmed. Drennan, used this bid, being the lowest, and placed their bid based on this offer. Plaintiff then went to Star's office the next day, and Defendant told him they made a mistake and couldn’t do the work for less than $15k. Plaintiff couldn’t find another subcontractor to do the work for the amt Star had offered, and ended up paying $10, 948.60. Drennan is suing Star for the difference plus costs. Issue: Holding: Did plaintiff's reliance make defendant's offer irrevocable? No. Judgment affirmed; for plaintiff based on promissory estoppel.

Reasoning: There was no contract created, since offeror retracted the offer before offeree could accept. There was no option supported by consideration, to make the offer irrevocable. RULE: Judge Traynor says that Star knew exactly what their bid was going to be used for. Star presented Drennan with a bid with full knowledge that Drennan would accept their bid (being the lowest) and rely on it to submit their own general bid. Star is expected to have foreseen this and should act cautious when submitting a bid, so that they don’t mislead someone because of their own error. Traynor says between the two parties, Star who made a bid (erroneously), and Drennan who relied upon it, the loss resulting from the mistake should fall on the party who caused it, Star Notes • Bid not revocable. • Is there a promise? - no. ○ Is there an expectation on Star's part, that is Drennan gets the bid, that they will do the subcontract work? - Yes, but an expectation is not a promise. ○ How is Star's offer to be accepted? - by promise. Drennan would have to inform Star they are accepting the bid. ○ So, there is a dilemma here - acceptance is by promise, so restatement 45 wont work because only for unilateral contract. ○ Drennan visits Star, but didn’t actually accept (b/c Star revoked before he could) • Plaintiff's reliance made the offer irrevocable - within a reasonable time period (determined by circumstances - its contextual) ○ Reliance by Drennan was reasonable - this was a foreseeable reliance ○ Star would expected that Drennan would rely on it, but again, no actual promise • This rule applies in this state (Supreme Court of CA tells you it has adopted the view of the restatement) Pg 386 - idea of how long offer remains irrevocable. "It bears…" notion of reasonableness

• Option - better to do WITH consideration ○ The resiliency of the option if better with consideration ○ If there is an option contract with consideration, there can be no revocation, and a counteroffer has no effect § Any counteroffer could terminate the reliance option • For Star to have been bound you could have asked for ○ A conditional acceptance (Drennan accepts Star's bid if Drennan gets the job) ○ Or ask for an option contract • This is a reliance option (no consideration) - how long does this last? ○ Reasonable time here Restatement 87 (1) 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.