51 Cal. 2d 409, 333 P.2d 757 (1958)
On July 28, 1955, plaintiff, a licensed general contractor, was preparing a bid on the Monte Vista School Job in the Lancaster school district with bids due before 8 p.m.1 It was customary in that area for general contractors to receive the bids of subcontractors by telephone on the day set for bidding and to rely on them in computing their own bids.2
Plaintiff's secretary received between 50 and 75 subcontractors’ bids by telephone that day and recorded them on special forms for plaintiff to post on a master cost sheet.3
Late in the afternoon, defendant's estimator telephoned and submitted a bid of $7,131.60 for the paving work according to the plans and specifications.4 Plaintiff listened to the bid over an extension telephone and posted it on the master sheet, where it was the lowest bid for the paving.5 Plaintiff computed his own bid of $317,385 accordingly, submitted it naming defendant as the subcontractor for the paving, and was awarded the contract when his bid proved the lowest.6
The next morning, plaintiff stopped at defendant's office and was told by defendant's construction engineer that they had made a mistake in their bid and could not do the work for the price bid. Plaintiff informed the engineer that he expected defendant to carry through with the original bid since he had used it in compiling his bid.7 Defendant subsequently refused to perform the paving work for less than $15,000.8
Plaintiff obtained figures from other subcontractors.9 After several months, he engaged L & H Paving Company to do the work for $10,948.60.10 The trial court found that defendant made a definite offer to do the paving for $7,131.60 and that plaintiff relied on the bid in computing his own bid and naming defendant as the subcontractor.11 It entered judgment for plaintiff in the amount of $3,817, the difference between defendant's bid and the cost of the paving to plaintiff, and defendant appealed from that judgment.12
Whether plaintiff’s reliance made defendant’s offer irrevocable?13
Section 90 of the Restatement of Contracts states the following rule. A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.14 This rule applies in this state.
Yes. Defendant's offer constituted a promise to perform the paving work for $7,131.60 according to the plans and specifications.15 Defendant had reason to expect that if its bid proved the lowest it would be used by plaintiff in computing his bid for the school job and naming defendant as the subcontractor.16 Plaintiff did rely on defendant's bid by incorporating the $7,131.60 figure into his own bid of $317,385, which bound him to perform the main contract if awarded the job.17
This reliance was of a definite and substantial character because plaintiff named defendant in the bid and became obligated upon winning the contract.18 Injustice can be avoided only by enforcement of the promise, as plaintiff had to procure alternative paving services at a higher cost after defendant's refusal.19
Plaintiff's reliance made defendant’s offer irrevocable under the doctrine of promissory estoppel.20
Whether defendant’s mistake in its bid entitled it to revoke the offer?21
A subcontractor's mistake in its bid does not entitle it to revoke the offer. This rule applies where the general contractor had no reason to know of the mistake and reasonably relied on the bid. The loss resulting from the mistake should fall on the party who caused it.22
No. Although defendant claimed a mistake in its bid of $7,131.60, plaintiff had no reason to know that defendant had made a mistake, since there was usually a variance of 160 per cent between the highest and lowest bids for paving in the desert around Lancaster.2324 Plaintiff committed himself to performing the main contract in reliance on defendant's figures by naming it as the subcontractor.25 Defendant's mistake, far from relieving it of its obligation, constitutes an additional reason for enforcing it, for it misled plaintiff as to the cost of doing the paving.26 As between the subcontractor who made the bid and the general contractor who reasonably relied on it, the loss resulting from the mistake should fall on the party who caused it.27
Defendant’s mistake in its bid did not entitle it to revoke the offer.28