## Facts

- A city solicited sealed bids for a public water treatment facility project and required a 5% bid bond with each bid.
- Powder Horn submitted the low bid of $699,500 with a $34,975 bid bond; the next lowest bid was $754,330.
- The day after bid opening, the city’s consulting engineer told Powder Horn that a line item appeared substantially low and suggested a review.
- Within two days of bid opening, Powder Horn advised the engineer it had omitted $66,660 for a major item and withdrew the bid.
- The city nonetheless purported to accept Powder Horn’s bid, Powder Horn refused to sign the contract, and the city awarded the work to the next lowest bidder.
- The city sued Powder Horn and its surety to forfeit the bid bond as damages for refusing to execute the contract.
- The trial court ordered forfeiture; the court of appeals recognized that rescission may be available in some circumstances but affirmed; the state supreme court granted review.

## Issues

1. Whether a low bidder may obtain equitable relief from forfeiture of a bid bond by rescinding a bid based on a good-faith clerical or mathematical mistake discovered and disclosed before acceptance.
2. Whether the city could enforce bid bond forfeiture where it had notice of the mistake and withdrawal and had not relied to its detriment on the mistaken bid.

## Decision

- The supreme court reversed and remanded with directions to grant equitable relief from forfeiture of the bid bond.
- The court held that a bidder may rescind a bid containing a good-faith clerical or mathematical mistake made before acceptance, provided the public authority has not relied to its detriment on the mistaken bid.
- Because Powder Horn promptly withdrew after discovering a material omission and the city had notice before taking detrimental action, forfeiture was improper.

## Legal Principles

- Equity permits rescission of a public works bid for a material clerical or mathematical mistake made in good faith when the bidder gives prompt notice and rescinds before acceptance in a contract-formation sense.
- A public entity may not knowingly take advantage of a bidder’s substantial mistake by insisting on bid bond forfeiture when the entity has not changed position in detrimental reliance.
- Rescission in this setting does not require a categorical showing that the bidder was free from ordinary negligence; the focus is good faith, materiality, prompt withdrawal, and lack of detrimental reliance.
- A public authority’s unilateral “acceptance” after notice of withdrawal does not create a contract where mutual assent is absent due to a timely rescission for mistake.

## Conclusion

The court held that a low bidder who promptly withdraws a materially mistaken bid caused by a good-faith clerical or mathematical error before acceptance, and before the public entity detrimentally relies, is entitled to rescind and avoid forfeiture of the bid bond.


Powder Horn Constructors, Inc. v. City of Florence, 754 P.2d 356 (Colo. 1988)