Unilateral and Mutual Mistake

Case: Boise Junior College District v. Mattefs Construction Co. (1969, ID) [pp.
472-479]

Parties: Plaintiff - Boise Junior College District

Defendant - Mattefs Construction

Facts: P accepting bids for a construction contract, and estimated the costs at
$150,000. D placed a bid for a construction contract with P for $141,048,
including a bid bond containing a promise to pay the difference b/w its bid and
the next higher bid if it ultimately refused to perform. D's bid was very low due
to a mistake, and refuses to perform. P ends up using the next lowest bidder for
$148,915, and brings D to court to try and collect on the bond (for the
difference). Trial court finds against P, and P appeals.

Issue: Whether a party is entitled t rescission due to a unilateral mistake.

Yes.

Holding: Affirmed for defendant. Contract rescinded.

Reasoning: Court uses a 5-part test here, to decide whether one who errs in
preparing a bid for a public works contract is entitled to equitable relief of
rescission:
1. The mistake is material
§ omission of an item representing 14% of the total cost is material.
§ Court has discretion here. Mistaken party is asking for rescission of the
contract (equitable remedy).
□ Equitable remedy - means that the judge will do equity - what is fair.
2. Enforcement of a contract pursuant to the terms of the erroneous bid would be
unconscionable
§ If contract is enforced, D would not only lose a profit, it would lose $10,000
if they were forced to comply. The actual cost is $151,000, and their bid was for
$141,000.
3. The mistake did not result from violation of a positive legal duty or from
culpable negligence
§ The mistake was due to clerical error; not fraudulent, negligent or bad faith.
§ It was negligent to leave out the glass and the plumbing. But not culpable
negligence. It was not willful (like leaving it out purposefully to get the lowest
bid).
§ Court concluded they used ordinary care in the bid preparation, that is, the
same care other contractors would use. No evidence of gross negligence or willful
omission.
□ Effect of allowing gross mistakes this on public policy - disrupt process of
contracting (to make the cost of contracting as low as possible).
4. The party to whom the bid is submitted will not be prejudiced except by the
loss of the bargain
§ No hardship on P. P was expecting to pay $150,000. The next lowest bid which was
accepted was for $149,000. P will not suffer any hardship; only that they won't
save more money than.
5. Prompt notice of the error is given
§ The notice of the error was adequate. Notice of error was given before P could
accept.

RULE: snap up theory- can’t quickly take offer if you have reason to be suspicious
it is mistaken. Though generally do not excuse errors of negligence or bad
business judgment.