## Facts

- The University of Minnesota solicited competitive bids for a classroom-laboratory building; ventilation work was part of the prime mechanical contract.
- Bostrom Sheet Metal Works, Inc. prepared a ventilation subcontract bid and, on bid day, telephoned a $372,000 bid to Constructors Supply Co. (d/b/a Harris Plumbing & Heating Co.) and other mechanical contractors roughly two hours before prime bids were due.
- Bostrom’s estimator discussed the bid items and price with Constructors’ vice-president by phone.
- Constructors incorporated Bostrom’s $372,000 figure into its prime bid; it was the lowest ventilation number Constructors received and contributed to Constructors winning the prime mechanical contract.
- After award of the prime contract, Bostrom discovered mistakes in its bid, attempted to withdraw it, and submitted a higher replacement bid of $421,000.
- Constructors refused the higher bid, obtained substitute ventilation work at greater cost, and claimed a net loss of $9,848 attributable to the withdrawal.
- The trial court found Constructors’ reliance reasonable and entered judgment for Constructors for $9,848; Bostrom appealed.

## Issues

1. Whether promissory estoppel can bind a subcontractor to its bid when the prime contractor reasonably and foreseeably relied on the bid in submitting a successful prime bid.
2. Whether the evidence supported findings that the prime contractor’s reliance was reasonable and not barred by inequitable conduct such as bid shopping or bid chopping.
3. What remedy is proper when a subcontractor withdraws after the prime contractor has relied on the bid.

## Decision

- The Minnesota Supreme Court affirmed the judgment for Constructors.
- The court held Bostrom’s bid was enforceable under promissory estoppel because Bostrom should reasonably have expected its bid to induce reliance, Constructors in fact relied, and enforcement was necessary to prevent injustice.
- The court upheld the trial court’s findings that Constructors did not engage in bid shopping or bid chopping and did not know of any error when it used the bid.
- The court approved a reliance-based award of $9,848 for the additional cost incurred in obtaining substitute ventilation work.

## Legal Principles

- Under promissory estoppel, an offer may be enforced when the offeror should reasonably expect it to induce action or forbearance of a definite and substantial character, it does induce such action, and enforcement is necessary to prevent injustice.
- In construction bidding, a subcontractor’s bid communicated to prime contractors near the bidding deadline is made in a commercial setting where reliance in the prime bid is foreseeable.
- A prime contractor’s reliance may be reasonable despite time pressure and lack of a signed subcontract when the bid appears deliberate and is confirmed in substance before submission.
- Allegations of bid shopping or bid chopping will not defeat promissory estoppel absent proof of such conduct.
- The remedy may be limited to reliance damages measured by the additional costs caused by the subcontractor’s withdrawal, rather than compelling performance of the subcontract.

## Conclusion

The court held that a subcontractor who submits a bid under circumstances making prime-contractor reliance foreseeable may be bound under promissory estoppel once the prime contractor reasonably relies on the bid in winning the prime contract, and it affirmed an award limited to the prime’s reliance loss.


Constructors Supply Co. v. Bostrom Sheet Metal Works, Inc., 291 Minn. 113 (1971)