## Facts

- A rural water district solicited bids for a water distribution and storage construction project and required a bid bond equal to 5% of each bid to secure execution of the contract if awarded.
- Triple A Contractors, Inc. submitted the apparent low bid of $812,753, about $169,079.50 lower than the second-lowest bid, prompting suspicion that the bid contained an error.
- Within days of the bid opening, Triple A discovered a clerical/computational mistake in its bid, notified the project engineer, and promptly requested permission to withdraw the bid by written notice.
- After receiving notice of the error and withdrawal request, the district nevertheless voted to accept Triple A’s bid.
- Triple A refused to execute the construction contract, and the district sought to enforce the bid bond as a default.
- Triple A sued for equitable rescission of its bid and cancellation of liability on the bid bond based on unilateral mistake.

## Issues

1. Whether a contractor may obtain equitable rescission of a public construction bid for a material, good-faith, non-negligent clerical mistake that is promptly reported, when the public body can be restored to the status quo without substantial prejudice.
2. Whether the public entity may recover on a bid bond when it knew or had reason to know of the bidder’s mistake before acceptance and suffered no substantial detrimental reliance.

## Decision

- The Kansas Supreme Court reversed the trial court.
- The court held Triple A was entitled to rescission of its bid based on unilateral, material clerical mistake.
- The court held the district could not enforce the bid bond under the circumstances.
- The case was remanded with directions to grant relief consistent with rescission of the bid and exoneration from bid-bond liability.

## Legal Principles

- Equity may rescind a bid for unilateral mistake when the error is material, clerical or computational (not judgmental), made in good faith despite reasonable care, and promptly communicated after discovery.
- Rescission is appropriate when enforcement would be unconscionable and the public entity can be returned to substantially the same position without substantial prejudice.
- A public owner’s notice of a probable mistake (including an unusually large disparity from other bids and direct bidder notification) weighs against enforcing the bid as accepted.
- A bid bond functions as security against actual harm from bid withdrawal, not as a penalty; if equitable rescission of the bid is warranted, forfeiture on the bond is improper absent substantial prejudice.

## Conclusion

The court permitted a contractor to withdraw and rescind a mistaken public bid and avoided bid-bond forfeiture because the mistake was a prompt, good-faith clerical error, the public entity was on notice, and the entity could proceed with another bid without substantial harm.


Triple A Contractors, Inc. v. Rural Water District No. 4, Neosho County, 603 P.2d 184 (Kan. 1979)