## Facts

- A public college district solicited competitive bids for a construction project with an architect’s estimate of about $150,000.
- Bids opened with the three lowest being: Fulton Construction ($134,896), Mattefs Construction Co. ($141,048), and Cain & Hardy, Inc. ($148,915).
- Bid specifications barred withdrawal for 45 days and required a bid bond obligating the bidder to pay the difference between its bid and the next higher bid accepted if it refused to execute the contract.
- The lowest bidder (Fulton) refused to sign a contract; the district then tendered the contract to Mattefs.
- Mattefs refused after discovering a clerical omission of the glass subcontract price, about 14% of its total bid; correcting the error would have raised its costs to roughly $151,000.
- The district awarded the contract to Cain & Hardy and sued Mattefs and its surety to recover on the bid bond for the difference between Mattefs’s bid and the price paid to Cain & Hardy.
- The trial court granted Mattefs equitable rescission of its bid and denied recovery on the bid bond; the district appealed.

## Issues

1. Whether a bidder on a public works contract may obtain equitable rescission of an erroneous bid containing a material clerical mistake, despite nonwithdrawal and bid-bond provisions.
2. What conditions must be shown to justify rescission of an erroneous public bid and avoidance of bid-bond liability.
3. Whether the district suffered prejudice sufficient to defeat rescission when the project was awarded to the next bidder.

## Decision

- The Idaho Supreme Court affirmed the judgment granting rescission and denying recovery on the bid bond.
- The court held that rescission is available for a bidder’s material clerical mistake when specified equitable conditions are proven.
- The court found the omission material and enforcement of the erroneous bid unconscionable given the substantial loss Mattefs would incur.
- The court found the mistake was clerical and not the result of culpable negligence or violation of a positive legal duty.
- The court concluded the district was not prejudiced beyond losing the benefit of an unusually favorable bid because the ultimate award price was within the district’s expected cost range.
- The court found Mattefs gave prompt notice of the mistake before any contract with Mattefs was finalized.

## Legal Principles

- A contractor who makes an error in preparing a public works bid is entitled to equitable rescission upon proving:
  - the mistake is material;
  - enforcing a contract under the erroneous bid would be unconscionable;
  - the mistake did not result from violation of a positive legal duty or culpable negligence;
  - the public entity will not be prejudiced except by loss of the bargain; and
  - the bidder gives prompt notice of the error.
- A material clerical omission that goes to the essence of the bid and would cause substantial economic loss supports rescission when the public entity can proceed with the next acceptable bid without substantial harm.
- Loss of a favorable bargain, without more, is insufficient prejudice to bar rescission when the other conditions for equitable relief are met.

## Conclusion

The court permitted rescission of a public-contract bid due to a material clerical omission and, because the equitable conditions were satisfied and the public entity’s only harm was loss of a low price, refused to enforce the bid bond against the bidder and its surety.


Boise Junior Coll. Dist. v. Mattefs Constr. Co., 92 Idaho 757, 450 P.2d 604 (Idaho 1969)