## Facts

- A public entity solicited sealed bids for rehabilitation work at a wastewater facility, including removal and replacement of piping and filter material.
- The public entity’s engineer estimated the project cost at $1,257,000.
- A general contractor submitted the lowest bid at $882,600, substantially below the next lowest bid and the engineer’s estimate, and posted a $100,000 certified check as bid security.
- The bid form stated the proposal would not be withdrawn and provided that if the bidder refused to execute the contract and furnish the bond within 13 days after award, the $100,000 deposit would be retained as liquidated damages.
- A major component of the contractor’s bid came from a subcontractor’s price; the subcontractor had inspected the site and reviewed specifications before quoting.
- After bid opening, the subcontractor discovered it had misunderstood the specifications regarding whether standard construction equipment could be driven over required plastic pipe, and concluded performance would cost about $150,000 more than anticipated.
- The contractor verified the mistake and attempted to withdraw the bid two days after bid opening and before any award.
- The public entity refused withdrawal and refused to return the bid security, stating it would award the contract to the contractor.
- The contractor sought rescission and injunctive relief; the trial court granted rescission, enjoined enforcement/award to the contractor, and ordered return of the $100,000 deposit.

## Issues

1. Whether a bidder on a public contract may rescind a bid for unilateral mistake and recover its bid deposit despite a non-withdrawal and liquidated-damages clause.
2. Whether the mistake was material, occurred despite reasonable care, and was so grave that enforcing the bid would be unconscionable.
3. Whether prompt notice, lack of detrimental reliance by the public entity, and a large bid discrepancy supported equitable relief.

## Decision

- The appellate court affirmed the judgment granting rescission and ordering return of the $100,000 bid deposit.
- The court found clear evidence of a unilateral mistake tied to a technical misunderstanding that materially affected method and cost of performance.
- The court concluded the mistake was sufficiently grave that enforcement would be unconscionable given the magnitude of the cost impact and the threatened forfeiture consequences.
- The court held the bidder exercised reasonable care by relying on an experienced subcontractor that inspected the site and examined specifications.
- The court emphasized the bidder’s prompt attempt to withdraw before award and the public entity’s ability to proceed with the next lowest bid without having changed position.
- The court noted the large disparity between the low bid, other bids, and the engineer’s estimate placed the public entity on notice of a likely error.
- The court rejected the argument that public bidding policies and bid-security provisions categorically bar rescission where equitable conditions for unilateral mistake are met.

## Legal Principles

- Rescission may be granted for unilateral mistake when the mistake concerns a material feature of the contract, occurred despite reasonable care, and is so grave that enforcement would be unconscionable.
- In assessing rescission for bid mistake, courts consider whether the mistaken party gave prompt notice, whether the other party materially changed position in reliance, and whether bid disparities put the other party on notice of error.
- A non-withdrawal clause and bid-security/liquidated-damages provision do not necessarily preclude equitable rescission when the public entity can be protected and has not suffered detrimental reliance.
- Clear and convincing (clear and positive) proof of the mistake and its consequences supports equitable relief.

## Conclusion

The court held that equitable rescission was available in a public bidding setting where a bidder promptly sought withdrawal before award based on a proven, material unilateral mistake made despite reasonable care, and where enforcing the bid and forfeiture would be unconscionable and unnecessary to protect the public entity’s interests.


Wil-Fred's, Inc. v. Metro. Sanitary Dist. of Greater Chi., 57 Ill. App. 3d 16, 372 N.E.2d 946 (Ill. App. Ct. 1978)