## Facts

- William A. Drennan, a general contractor, solicited subcontractor bids while preparing a prime bid to build a public school.
- Star Paving Company submitted the lowest paving bid (about $7,131.60) by telephone.
- Drennan incorporated Star’s figure into his prime bid, which was accepted; Drennan was awarded the general contract.
- After award, Drennan notified Star it had the paving subcontract; Star then claimed a substantial mistake and refused to perform at its quoted price, offering instead to do the work for about $15,000.
- Drennan rejected the new price, obtained a substitute paving subcontract for $10,948.60, and sued Star for the difference.
- The trial court awarded Drennan $3,817 (plus costs), measured by the difference between Star’s bid and the substitute contract price.

## Issues

1. Whether a subcontractor’s bid becomes temporarily irrevocable when the general contractor reasonably and foreseeably relies on it in submitting a binding prime bid, despite no consideration for an option.
2. Whether promissory estoppel (Restatement (First) of Contracts § 90) can enforce the subcontractor’s bid in this setting.
3. Whether the general contractor failed to mitigate damages by refusing the subcontractor’s higher price or by allegedly not securing a cheaper substitute.

## Decision

- The California Supreme Court affirmed the judgment for Drennan.
- The court held Star’s bid was enforceable because Star should reasonably have expected Drennan to rely on it, and Drennan did so by submitting a binding prime bid.
- The court applied promissory estoppel to render Star’s offer temporarily irrevocable for a reasonable time after reliance.
- The court rejected Star’s mitigation arguments and upheld damages equal to the difference between Star’s bid and the cost of substitute performance.

## Legal Principles

- Under Restatement (First) of Contracts § 90, a promise that the promisor should reasonably expect to induce action, and that does induce such action, is binding when necessary to avoid injustice.
- In competitive construction bidding, a subcontractor’s bid may carry an implied commitment not to revoke after the general contractor reasonably relies by submitting a binding prime bid.
- Reliance must be reasonable; if the bid’s error is so apparent that the general contractor should recognize it, reliance may be unjustified and enforcement may be denied.
- A subcontractor’s unilateral mistake does not, by itself, defeat enforcement where reliance was foreseeable and reasonable.
- Proper damages may be measured by the difference between the relied-upon bid and the cost of reasonable substitute performance, and the general contractor must act reasonably in obtaining a substitute.

## Conclusion

The court held that a subcontractor whose bid foreseeably induces a general contractor to submit a binding prime bid may be bound under promissory estoppel, making the bid temporarily irrevocable and supporting damages based on the reasonable cost of substitute performance when the subcontractor refuses to perform.


Drennan v. Star Paving Co., 51 Cal. 2d 409, 333 P.2d 757 (Cal. 1958)