Wil-Fred's, Inc. v. Metropolitan Sanitary District

Facts

D published a bid for the rehabilitation of sand drying beds. The announcement specified that the work to be performed required the contractor to remove 67,500 linear feet of clay pipe and 53,200 cubic yards of gravel from the beds and to replace these items with plastic pipe and fresh filter material. Although plastic pipes were called for, the specifications declared that 'all pipes * * * must be able * * * to withstand standard construction equipment.' The advertisement further stated that 'the cost estimate of the work as determined by the Engineering Department of the * * * Sanitary District * * * is $1,257,000.00.' A proposal form provided: 'The undersigned hereby certifies that he has examined the contract documents * * * and has examined the site of the work, * * *. The undersigned has also examined the Advertisement, the 'bidding requirements,' has made the examinations and investigation therein required, * * *. The undersigned hereby accepts the invitation of the D to submit a proposal on said work with the understanding that this proposal will not be canceled or withdrawn. It was further stated that if the undersigned shall fail or refuse to execute the same and furnish the specified bond within thirteen (13) days after receiving notice of the award of said contract, then the sum of One Hundred Thousand Dollars ($100,000.00), deposited herewith, shall be retained by D as liquidated damages and not as a penalty... An addendum changed the filter material to a less expensive type that could be obtained locally. D submitted the low bid of $882,600 which was accompanied by the $100,000 bid deposit and the aforementioned proposal form signed on behalf of the company by D's vice president. Eight other companies submitted bids on January 6. The next lowest bid was $1,118,375, and it was made by Greco Contractors, Inc. Two days later P sent D a telegram which stated that it was withdrawing its bid and requested return of its bid deposit. This telegram was confirmed by a subsequent letter mailed the same day. Four days later, P explained to D that its excavating subcontractor, Ciaglo Excavating Company, had been a substantial error in its bid, and therefore it would have to withdraw its quotation since performing the work at the stated price would force the subcontractor into bankruptcy. P also vouched for Ciaglo's prior work inferring that P acted reasonably in utilizing Ciaglo's quoted price in formulating its own bid. D stated that the error did not justify withdrawal and P would be awarded the bid at its original price. P filed its complaint for preliminary injunction and rescission. The complaint alleged that the company would be irreparably injured if required to perform the contract at such an unconscionably low price or if forced to forfeit the $100,000 bid deposit. P testified that a loss of the $100,000 security deposit would result in the company's loss of bonding capacity in the amount of two to three million dollars; that P decided not to attempt to force Ciaglo to honor its subcontract because the company felt that Ciaglo was not financially capable of sustaining a $150,000 loss; and that P was aware of D's cost estimate before it submitted its bid. P testified that the addendum changing the filter material into account when calculating the price of the bid and concluded that this alteration would result in a cost savings of over $200,000. Ciaglo testified that its error emanated from the assumption that heavy equipment could be employed because the specifications called for the utilization of standard construction equipment. Ciaglo first learned that the plastic pipes would not support heavy equipment as part of his review of the price quote; he contacted the pipe manufacturer. The trial court granted rescission and ordered D to return the $100,000 bid deposit to P. D seeks to reverse this judgment order. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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