7. WIL-FRED’s INC. v. METROPOLITAN SANITARY DISTRICT
Illinois Appellate Court 57 Ill. App. 3d 16, 372 N.E. 2d 946 (1978)
FACTS
Appellant(Sanitary District) invite bids for rehabilitation work and Wil-Fred’s inc. submitted a sealed bid and as a security deposit to insure its performance, a $100,000 certified check. After the bids were opened, Wil-Fred’s, the low bidder, attempted to withdraw because Ciaglo Excavating Company who was the only subcontractor in Wil-Fred’s bid, found that there had been a substantial error in its bid. The Sanitary District rejected the request by reasoning that this did not justify withdrawal of the bid. Then, Wil-Fred’s filed its complaint for preliminary injunction and rescission. The Trial court granted Wil-Fred’s rescission and ordered the Sanitary District to return the $100,000 bid deposit. The Sanitary District appealed to reverse the judgment.
ISSUE
Whether rescission can be granted when bidder request because of its unilateral mistake.
RULE
In Illinois the conditions generally required for rescission are; that the mistake related to a material features of the contract; that it occurred notwithstanding the exercise of reasonable care: that it is of such grave consequence that enforcement of the contract would be unconscionable.
13 Williston on Contracts Section 1578(3d ed. Jaeger 1970)
Unilateral mistake may afford ground for rescission where there is a material mistake is so palpable that the party not is error will be put on notice of its existence.
White v. Berrenda Mesa Water District (1970)
In fairness to the individual bidder, that the facts surrounding the error, not the label, i.e. “mistake of fact” or “mistake of judgment,” should determine whether relief is granted.
APPLICATION
When Wil-Fred’s submitted the bid, they agreed to bind themselves and Sanitary District the contract. And the deposit would be forfeited because Wil-Fred’s attempt to withdraw was subject to the condition incorporated in the proposal by Sanitary District. However, Wil-Fred’s argued that the mistake was material to the contract; that this error was directly caused by the Sanitary District’s misleading specifications; that the Sanitary District had no damages in reliance upon the erroneous bid because the company promptly notified the District of the mistake.
According to the Illinois law, the Court concluded that the conditions for rescission are satisfied; Ciaglo’s misestimation was material. The mistake amount $150,000 represents approximately 17% of Wil-Fred’s bid. And the Consequences of Ciaglo’s error were grave. The subcontractor would bankrupt because of additional $150,000 and Wil-Fred’s would lose the same amount if they performed the contract. It is substantial hardship for both. Additionally, the Sanitary District was not damaged seriously due to withdraw of the bid since Wil-Fred’s promptly notified by telegram within 48 hours after the bid opened. The contract had not been awarded at this time. Lastly, Wil-Fred’s exercised due care as they selected Ciaglo as its subcontractor. They worked together for 12 occasions, Ciaglo always performed in highly skilled manner and never failed to honor a prior quotation. Also, they examined the specifications with estimators, and reviewed the price quotation for the bid with care.
Defendant argued that Illinois have granted relief only in cases where the bid has contained a clerical or mathematical error. The mistake of Wil-Fred was not a factual error but an error in business judgement. However, the Court states that Ciaglo’s error is a mixed mistake of judgment and fact. The Court granted relief according to the facts surrounding the error.
CONCLUSION
The trial court’s order granting rescission and the return of Wil-Fred’s security deposit is affirmed.
LIVE CLASS NOTE
한쪽의 실수로 인해 계약을 철회하려고 할 경우 어떤 요건을 충족해야하는지 살펴보았습니다.
입찰의 경우 어느 시점에 계약이 성립되는지와 피고가 마지막으로 주장했던 계산적(사무적) 실수와 판단 실수의 차이에 대해 생각해보는 시간을 가졌습니다.
Based in incorrect assumption
+ 그건 sanitary District 가 정보를 잘못줘서 생긴거다.
+ Wil-Fred promptly informed Sanitary district
The court should analyze the facts
**Condition should be met for rescission by unilateral mistake
Material mistake
Hardship- grave
Reasonable care
Statu quo - Notice of error
입찰 자체가 Offer and a unilateral agreement -> 경매자가 받아들이고 나면 양당사자에게 바인딩함.
이 시기에서 입찰자가 attempted to withdraw, it became a subject to the condition incorporated in the proposal -> under the condition, the company’s bid deposit was forfeited- > 계약을 수행하지 않기 떄문에