A bidder on a prime contract necessarily relies on price quotations from prospective trade subcontractors. Can that bidder, if awarded the prime contract, hold those would-be subs to their prices? The financial consequences of repudiated prices can be severe. Yet no binding contract was formed prior to bid submittal.
The Nevada Supreme Court recently held an electrical contractor to its pre-bid price quotation. The bidder on the public works contract had clearly relied on the quote. The bid listed the electrical contractor as a sub. And the reliance had been reasonable. The bidder had repeatedly obtained assurances of the accuracy of the quote from the electrical contractor. The measure of damages was the same as for breach of contract: the amount the prime contractor paid replacement electrical contractors in excess of the price quotation incorporated into the bid.
There are two sides to this story, however, and subcontractors should not always be held to their pre-bid price quotations. What if the bidder, after award of the prime contract, tries to talk down the sub’s price or shops that price around to other trade contractors? Has there been actual and reasonable reliance on the part of the bidder? What if the sub is presented with a written subcontract form containing unorthodox and onerous terms? Is the sub obligated to sign whatever is placed in front of it?
I invite comments from each side, general contractors and trade contractors. From your perspective, what do you consider “best practices” in managing the price quotation, bid submittal, subcontract award scenario?
Featured in Next Week’s Construction Claims Advisor:
- Owner Recovers under Warranty without Expert Opinion on Causation
- Idaho High Court Addresses Workmanship and Mechanic’s Liens
- Government Control Exception Did Not Excuse Late Delivered Proposal
Bruce Jervis, Editor
Construction Claims Advisor