Case: James Baird Co. v Gimbel Brothers, Inc.

(1933) 381-383 - US Court of

Appeals, 2nd Circuit, Judge Hand

Parties: Plaintiff - Baird (offeree, contractor)

Defendant - Gimbel (offeror, linoleum supplier)

Procedural History: Lower court found for defendant. Plaintiff appeals.

Facts: Dept of Highways in PA was accepting bids from contractors for the
construction of a public building. Gimbel was a linoleum seller, and had an
employee compute the amount of linoleum necessary for the construction, but there
was an error, and the amount computed was only half of what was actually needed
for the job. Before they found out about this mistake, Gimbel sent out offers to
contractors who would probably bid on the job.
○ Dec 24th - Gimbel sent out the offer
○ Dec 28th, in the following order:
§ Baird rec'd the offer
§ Gimbel learned of their mistake, and telegraphed all contractors to
whom it had sent an offer that they withdrew that offer and would re-issue another
for double the amount
§ Baird put in a bid for the job, depending on the price offered by
Gimbel
§ Baird found out about Gimbel's error
○ Dec 30th, Baird's bid was accepted
○ Dec 31st, Gimbel confirmation letter of withdrawal was rec'd by Baird
○ Jan 2, Baird formally accepted Gimbel offer
When Gimbel would not recognize the existence of a contract, Baird sued for breach
of contract.

Issue: Did plaintiff's reliance on offer make it a binding contract?

Holding: Not binding, because no consideration. Affirmed for defendant.

Reasoning: Gimbel had withdrawn their offer before Baird could accept. Baird
had argued that his placing a bid was in effect acceptance because of the language
in Gimbel's offer, "if successful in being awarded this contract, it will be
absolutely guaranteed,[… and] prompt acceptance after the general contract has
been awarded." Court says no, there would not have been a contract until Baird
accepted Gimbel's offer to sell the linoleum after Baird was awarded the general
contract. So no contract. Plaintiff also argues promissory estoppel, but court
says if there is an offer, but no consideration, then there is no promissory
estoppel, even if there was reliance. Promissory estoppel is usually reserved for
contracts of a donative nature (unilateral contracts; gifts), not in a situation
where there is a bargained-for exchange. Court says promissory estoppel will not
be applied in cases where there is an offer for exchange, as the offer is not
intended to become a promise until consideration is received.

Notes

Court says offer was withdrawn before it was accepted.

Plaintiff pleading in the alternative, if they lose on contract theory, they will
try to win on promissory estoppel.

Gimbel's offer said "to supply all the linoleum required by the specs at two
different lump sums"
Gimbel's asked for a bid

Offer conditioned on communication of assent. Doesn’t become a contract without

such communication. For the subcontractor to rely in this manner on the linoleum
bid was unreasonable. (2nd circuit - NY relies on 2nd circuit)