## Facts

- MacDonald Engineering Co., the general contractor on a cement-silo project in Pennsylvania, solicited a price to place reinforcing steel rods for the job.
- Youngstown Steel Erecting Co. reviewed the project plans and specifications provided by MacDonald and submitted a written proposal to “place all the rods” (including unloading) for $55 per ton, with MacDonald to supply rods, wire, chairs, and accessories.
- MacDonald responded by letter acknowledging the proposal and stating, in substance, that Youngstown was being given the work at its quoted price, while addressing performance and scheduling expectations.
- Youngstown treated the exchange as a binding subcontract and made preparations to perform, including keeping labor available and declining conflicting work.
- MacDonald later awarded the reinforcing-rod work to another contractor at a lower price and never called on Youngstown to perform.
- Youngstown sued for breach of contract; the case was removed to federal court on diversity and tried to the court without a jury.

## Issues

1. Whether the July proposal and July response letter manifested mutual assent sufficient to form an enforceable subcontract.
2. Whether the agreement was too indefinite (including quantity and timing) to be enforceable in a construction setting.
3. If a contract existed, whether awarding the work to another subcontractor constituted breach and what damages were recoverable.

## Decision

- The court found that a binding subcontract was formed by Youngstown’s definite offer and MacDonald’s acceptance by letter.
- The court held the terms were sufficiently definite because scope and quantity were ascertainable from the project plans/specifications and the unit price was fixed.
- The court held MacDonald breached the subcontract by awarding the work to another contractor.
- The court awarded expectation damages measured by Youngstown’s lost profit (contract price less costs of performance), based on trial evidence.

## Legal Principles

- Contract formation turns on objective manifestations of assent shown by the parties’ words and conduct, not undisclosed intent.
- A written bid can be a definite offer when it specifies scope allocation and a determinate pricing method (e.g., price per ton).
- A responsive letter constitutes acceptance when it indicates a present commitment to award the work on the offered essential terms; subsidiary performance expectations do not necessarily prevent formation.
- A construction agreement is not unenforceable for indefiniteness if quantity and scope can be determined by reference to plans, specifications, and trade practice, and the pricing method supplies a workable measure.
- For wrongful displacement from a subcontract, expectation damages generally equal the profit the subcontractor would have earned had performance occurred.

## Conclusion

The court enforced a construction subcontract formed through bid-and-acceptance correspondence, held that the general contractor’s later award to a different subcontractor was a breach, and granted the subcontractor lost-profit damages proven at trial.


Youngstown Steel Erecting Co. v. MacDonald Eng'g Co., 154 F. Supp. 337 (N.D. Ohio 1957)