Drennan v. Star Paving Co.
Citation: Supreme Court of California, 51 Cal. 2d 409 (1958)
Facts
Star Paving submitted a bid to Drennan, a general contractor, to perform paving work as a subcontractor on a school construction project. Drennan used Star’s bid in computing his overall bid to the school district and was awarded the prime contract. The next day, Star told Drennan it had made an error in its bid and could not do the work for the quoted price. Drennan was forced to hire another paving company at a higher cost and sued Star for the difference.
Issue
Whether a general contractor may rely on a subcontractor’s bid to the extent that the sub-bid becomes irrevocable under promissory estoppel, even before the general contractor has formally accepted it.
Holding
Justice Traynor held that Star’s bid was irrevocable once Drennan had reasonably relied on it by using it as the basis for his own bid. Promissory estoppel prevented Star from revoking its offer after Drennan’s detrimental reliance.
Rule
A subcontractor’s bid becomes irrevocable once a general contractor reasonably and foreseeably relies on it in submitting a prime bid. Promissory estoppel supplies the consideration needed to hold the sub-bid open during the period of reasonable reliance.
Significance
The leading case applying promissory estoppel to the construction sub-bid context, in tension with James Baird Co. v. Gimbel Bros. Drennan is cited in support of Restatement (Second) § 87(2) and is central to debates about whether reliance alone can make an offer irrevocable without a formal option contract.