## Facts

- A public school district solicited competitive bids for additions to school buildings.
- E. J. Kastorff, a general contractor, prepared a bid using worksheets that listed intended subcontractor amounts and his own work costs.
- Near the submission deadline, Kastorff received two plumbing subcontract bids: $9,285 and then $6,500.
- Believing he had already included the $9,285 figure in his total, Kastorff subtracted about $3,000 to reflect the later lower bid, but he had not included any plumbing cost in the total column.
- Kastorff submitted a bid of $89,994, which unintentionally omitted any allowance for plumbing work.
- At bid opening, Kastorff’s bid was about $11,306 lower than the next lowest bid; district officials questioned him, and he stated the figures were correct after a brief check.
- The next day, Kastorff discovered the omission by reviewing his worksheets and determined his bid was short by $6,500.
- Within two days of bid opening, Kastorff (through his architect and by letter) notified the district of the error and requested release from the bid.
- The district refused to allow withdrawal, later sent a written acceptance, and demanded execution of a formal contract; Kastorff declined to sign.
- The district awarded the project to another bidder at $102,900 and sued Kastorff and his surety for the difference between that price and Kastorff’s bid.
- The trial court entered judgment for the district, finding the district lacked notice of a mistake and that Kastorff intended the bid submitted; Kastorff and his surety appealed.

## Issues

1. Whether a contractor may rescind a public-works bid for an honest, material clerical mistake promptly communicated before a formal contract is executed.
2. Whether the public entity may recover bid-differential damages from the contractor and his surety after the contractor refuses to execute the contract due to such a mistake.
3. What conditions limit equitable rescission for unilateral mistake in competitive bidding (materiality, ordinary care, notice, and prejudice).

## Decision

- The Supreme Court of California reversed the judgment for the school district.
- The court held Kastorff was entitled to rescind because the bid contained an honest, material clerical error and rescission was promptly communicated before execution of a formal contract.
- The court concluded enforcement of the mistaken bid would be inequitable and that the district’s claimed loss (the higher substitute contract price) was not the type of prejudice that bars rescission under these circumstances.
- Because the bid was rescinded, Kastorff was not obligated to execute the contract, and neither he nor his surety was liable for the cost difference.

## Legal Principles

- Equity may allow rescission for unilateral mistake in a construction bid when the mistake is clerical or computational, not a mere error in judgment.
- Rescission is available when the mistake is material and goes to the substance of the bid, making enforcement unjust.
- The mistaken bidder must act promptly upon discovery and give timely notice to the public entity, typically before a formal contract is executed and before significant reliance changes the public entity’s position.
- Relief is generally denied if the mistake results from neglect of a legal duty or failure to exercise ordinary care.
- A public entity’s need to accept a higher bid after withdrawal, standing alone, does not necessarily constitute substantial prejudice that defeats rescission.

## Conclusion

The court held that a contractor who promptly reports a material clerical mistake in a public-works bid before contract execution may rescind the bid, preventing the public entity from recovering bid-differential damages from the contractor and the bid bond surety.


Elsinore Union Elementary Sch. Dist. of Riverside Cnty. v. Kastorff, 54 Cal. 2d 380, 353 P.2d 713 (Cal. 1960)