Promissory estoppel in "Gimbel Bros" and "Drennan "

[강석근]

James Baird Co. v. Gimbel Bros.   

Circuit Court of Appeals, Second Circuit

April 10, 1933 

Case Summary

Procedural Posture

Plaintiff contractor appealed a judgment of the District Court of the United States for the Southern District of New York, which directed a verdict for defendant merchant after plaintiff sued for breach of contract.

Overview
Defendant merchant sent contractors who were likely to bid on a construction job an offer to supply material needed for the job at set prices. Defendant did not realize that he was mistaken about the total quantity of the material needed for the job. Plaintiff contractor received defendant's offer and bid on the construction job that same day, basing its bid on the prices quoted by defendant. Later that same day, defendant telegraphed a withdrawal of the offer to contractors, having learned of his mistake. Plaintiff formally accepted defendant's offer several days after receiving the telegraph and the written confirmation of withdrawal. Defendant refused to recognize a contract, and plaintiff sued for breach of contract. The trial court directed a verdict for defendant. The court affirmed, holding that because the offer was withdrawn before it was accepted, the acceptance was too late.

Outcome

The court affirmed the trial court's judgment, finding that defendant had withdrawn his offer before it was accepted by plaintiff.

Billings Learned Hand (/ˈlɜːrnɪd/ LURN-id; January 27, 1872 – August 18, 1961) was an American jurist, lawyer, and judicial philosopher. He served as a federal trial judge on the U.S. District Court for the Southern District of New York from 1909 to 1924 and as a federal appellate judge on the U.S. Court of Appeals for the Second Circuit from 1924 to 1951.

Born and raised in Albany, New York, Hand majored in philosophy at Harvard College and graduated with honors from Harvard Law School. After a relatively undistinguished career as a lawyer in Albany and New York City, he was appointed at the age of 37 as a federal district judge in Manhattan in 1909. The profession suited his detached and open-minded temperament, and his decisions soon won him a reputation for craftsmanship and authority. Between 1909 and 1914, under the influence of Herbert Croly's social theories, Hand supported New Nationalism. He ran unsuccessfully as the Progressive Party's candidate for chief judge of the New York Court of Appeals in 1913, but withdrew from active politics shortly afterwards. In 1924, President Calvin Coolidge elevated Hand to the Court of Appeals for the Second Circuit, which he went on to lead as the senior circuit judge (later retitled chief judge) from 1939 until his semi-retirement in 1951. Scholars have recognized the Second Circuit under Hand as one of the finest appeals courts in American history. Friends and admirers often lobbied for Hand's promotion to the Supreme Court, but circumstances and his political past conspired against his appointment.

Opinion

Before MANTON L. HAND, and SWAN, Circuit Judges.

L. HAND, Circuit Judge.

The plaintiff sued the defendant for breach of a contract to deliver linoleum under a contract of sale; the defendant denied the making of the contract; the parties tried the case to the judge under a written stipulation and he directed judgment for the defendant. The facts as found, bearing on the making of the contract, the only issue necessary to discuss, were as follows: The defendant, a New York merchant, knew that the Department of Highways in Pennsylvania had asked for bids for the construction of a public building. It sent an employee to the office of a contractor in Philadelphia, who had possession of the specifications, and the employee there computed the amount of the linoleum which would be required on the job, underestimating the total yardage by about one-half the proper amount. In ignorance of this mistake, on December twenty-fourth the defendant sent to some twenty or thirty contractors, likely to bid on the job, an offer to supply all the linoleum required by the specifications at two different lump sums, depending upon the quality used. These offers concluded as follows: "If successful in being awarded this contract, it will be absolutely guaranteed, * * * and * * * we are offering these prices for reasonable" (sic), "prompt acceptance after the general contract has been awarded." The plaintiff, a contractor in Washington, got one of these on the twenty-eighth, and on the same day the defendant learned its mistake and telegraphed all the contractors to whom it had sent the offer, that it withdrew it and would substitute a new one at about double the amount of the old. This withdrawal reached the plaintiff at Washington on the afternoon of the same day, but not until after it had put in a bid at Harrisburg at a lump sum, based as to linoleum upon the prices quoted by the defendant. The public authorities accepted the plaintiff's bid on December thirtieth, the defendant having meanwhile written a letter of confirmation of its withdrawal, received on the thirty-first. The plaintiff formally accepted the offer on January second, and, as the defendant persisted in declining to recognize the existence of a contract, sued it for damages on a breach.

HN1 Unless there are circumstances to take it out of the ordinary doctrine, since the offer was withdrawn before it was accepted, the acceptance was too late.  Restatement of Contracts, § 35. To meet this the plaintiff argues as follows: It was a reasonable implaication from the defendant's offer that it should be irrevocable in case the plaintiff acted upon it, that is to say, used the prices quoted in making its bid, thus putting itself in a position from which it could not withdraw without great loss. While it might have withdrawn its bid after receiving the revocation, the time had passed to submit another, and as the item of linoleum was a very trifling part of the cost of the whole building, it would have been an unreasonable hardship to expect it to lose the contract on that account, and probably forfeit its deposit. While it is true that the plaintiff might in advance have secured a contract conditional upon the success of its bid, this was not what the defendant suggested. It understood that the contractors would use its offer in their bids, and would thus in fact commit themselves to supplying the linoleum at the proposed prices. The inevitable implication from all this was that when the contractors acted upon it, they accepted the offer and promised to pay for the linoleum, in case their bid were accepted.

It was of course possible for the parties to make such a contract, and the question is merely as to what they meant; that is, what is to be imputed to the words they used. Whatever plausibility there is in the argument, is in the fact that the defendant must have known the predicament in which the contractors would be put if it withdrew its offer after the bids went in. However, it seems entirely clear that the contractors did not suppose that they accepted the offer merely by putting in their bids. If, for example, the successful one had repudiated the contract with the public authorities after it had been awarded to him, certainly the defendant could not have sued him for a breach. If he had become bankrupt, the defendant could not prove against his estate. It seems plain therefore that there was no contract between them. And if there be any doubt as to this, the language of the offer sets it at rest. The phrase, "if successful in being awarded this contract," is scarcely met by the mere use of the prices in the bids. Surely such a use was not an "award" of the contract to the defendant. Again, the phrase, "we are offering these prices for * * * prompt acceptance after the general contract has been awarded," looks to the usual communication of an acceptance, and precludes the idea that the use of the offer in the bidding shall be the equivalent. It may indeed be argued that this last language contemplated no more than an early notice that the offer had been accepted, the actual acceptance being the bid, but that would wrench its natural meaning too far, especially in the light of the preceding phrase. The contractors had a ready escape from their difficulty by insisting upon a contract before they used the figures; and HN2 in commercial transactions it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves.

But the plaintiff says that even though no bilateral contract was made, the defendant should be held under the doctrine of "promissory estoppel." This is to be chiefly found in those cases where persons subscribe to a venture, usually charitable, and are held to their promises after it has been completed. It has been applied much more broadly, however, and has now been generalized in section 90, of the Restatement of Contracts. We may arguendo accept it as it there reads, for it does not apply to the case at bar.  HN3 Offers are ordinarily made in exchange for a consideration, either a counter-promise or some other act which the promisor wishes to secure. In such cases they propose bargains; they presuppose that each promise or performance is an inducement to the other.  Wisconsin, etc., Ry. v. Powers, 191 U.S. 379, 386, 387, 24 S. Ct. 107 48 L. Ed. 229; Banning Co. v. California, 240 U.S. 142, 152, 153, 36 S. Ct. 338, 60 L. Ed. 569. But HN4 a man may make a promise without expecting an equivalent; a donative promise, conditional or absolute. The common law provided for such by sealed instruments, and it is unfortunate that these are no longer generally available. The doctrine of "promissory estoppel" is to avoid the harsh results of allowing the promisor in such a case to repudiate, when the promisee has acted in reliance upon the promise.  Siegel v. Spear & Co., 234 N.Y. 479, 138 N.E. 414, 26 A.L.R. 1205. Cf. Allegheny College v. National Bank, 246 N.Y. 369, 159 N.E. 173, 57 L.R.A. 980. But HN5 an offer for an exchange is not  meant to become a promise until a consideration has been received, either a counter-promise or whatever else is stipulated. To extend it would be to hold the offeror regardless of the stipulated condition of his offer. In the case at bar the defendant offered to deliver the linoleum in exchange for the plaintiff's acceptance, not for its bid, which was a matter of indifference to it. That offer could become a promise to deliver only when the equivalent was received; that is, when the plaintiff promised to take and pay for it. There is no room in such a situation for the doctrine of "promissory estoppel."

Nor can the offer be regarded as of an option, giving the plaintiff the right seasonably to accept the linoleum at the quoted prices if its bid was accepted, but not binding it to take and pay, if it could get a better bargain elsewhere. There is not the least reason to suppose that the defendant meant to subject itself to such a one-sided obligation.

True, if so construed, the doctrine of "promissory estoppel" might apply, the plaintiff having acted in reliance upon it, though, so far as we have found, the decisions are otherwise.  Ganss v. Guffey Petroleum Co., 125 App. Div. 760, 110 N.Y.S. 176; Comstock v. North, 88 Miss. 754, 41 So. 374. As to that, however, we need not declare ourselves.

Judgment affirmed.

James Baird case 에서는 New York주  Promissory estoppel 을 gift 에만 적용 하는 제한적인 의미로 해석 하고 있습니다.  25년후 California 에서는 더욱 확장된 의미로 사용되고 있음을 알 수 있습니다.

Drennan v. Star Paving Co.

Copy Citation

Supreme Court of California

December 31, 1958 

WILLIAM A. DRENNAN, Respondent, v. STAR PAVING COMPANY (a Corporation), Appellant

Overview

Plaintiff was a licensed general contractor preparing a bid for a school district. Defendant subcontractor was the lowest bidder for the paving work. Plaintiff used defendant's bid in computing his own bid for a school project. The day after receiving defendant's bid, plaintiff stopped by defendant 's office, whereupon plaintiff was informed that defendant's bid was a mistake. Defendant refused to do the paving work at the price originally given plaintiff. Plaintiff sued defendant to recover damages caused by defendant's refusal to perform the work according to its bid. On appeal, the court affirmed the award of damages to plaintiff, since the loss resulting from any mistake fell upon the party who caused it. Plaintiff had no reason to believe that defendant's bid was in error and plaintiff was entitled to rely upon it.

Roger John Traynor (February 12, 1900 – May 14, 1983) was the 23rd Chief Justice of California (1964-1970) and an associate justice of the Supreme Court of California from 1940 to 1964.[1] Previously, he had served as a Deputy Attorney General of California under Earl Warren, and an Acting Dean and Professor of UC Berkeley School of Law.[2][3] He is widely considered to be one of the most creative and influential judges and legal scholars of his time.[2][4][5][6][7][8][9]

A jurist noted for liberalism and activism, Traynor's 30-year career as California's 77th Justice coincided with tremendous demographic, social, and governmental growth in California and in the United States of America.[2][4] Traynor believed (in the words of his biographer, G. Edward White) that "the increased presence of government in American life was a necessary and beneficial phenomenon."[10] After his retirement from the California Supreme Court, Traynor spent the last years of his life as a professor at the UC Hastings College of Law.[2][3]

Opinion by: TRAYNOR 

Defendant appeals from a judgment for plaintiff in an action to recover damages caused by defendant's refusal to perform certain paving work according to a bid it submitted to plaintiff.

On July 28, 1955, plaintiff, a licensed general contractor, was preparing a bid on the "Monte Vista School Job" in the Lancaster school district. Bids had to be submitted before 8 p. m. Plaintiff testified that it was customary in that area for general contractors to receive the bids of subcontractors by telephone on the day set for bidding and to rely on them in computing their own bids. Thus, on that day plaintiff's secretary, Mrs. Johnson, received by telephone between 50 and 75 subcontractors' bids for various parts of the school job. As each bid came in, she wrote it on a special form, which she brought into plaintiff's office. He then posted it on a master cost sheet setting forth the names and bids of all subcontractors. His own bid had to include the names of subcontractors who were to perform one-half of one per cent or more of the construction work, and he had also to provide a bidder's bond of 10 per cent of his total bid of $ 317,385 as a guarantee that he would enter the contract if awarded the work.

Late in the afternoon, Mrs. Johnson had a telephone conversation with Kenneth R. Hoon, an estimator for defendant. He gave his name and telephone number and stated that he was bidding for defendant for the paving work at the Monte Vista School according to plans and specifications and that his bid was $ 7,131.60. At Mrs. Johnson's request he repeated his bid. Plaintiff listened to the bid over an extension telephone in his office and posted it on the master sheet after receiving the bid form from Mrs. Johnson. Defendant's was the lowest bid for the paving. Plaintiff computed his own bid accordingly and submitted it with the name of defendant as the subcontractor for the paving. When the bids were opened on July 28th, plaintiff's proved to be the lowest, and he was awarded the contract.

On his way to Los Angeles the next morning plaintiff stopped at defendant's office. The first person he met was defendant's construction engineer, Mr. Oppenheimer. Plaintiff testified: "I introduced myself and he immediately told me that they had made a mistake in their bid to me the night before, they couldn't do it for the price they had bid, and I told him I would expect him to carry through with their original bid because I had used it in compiling my bid and the job was being awarded them. And I would have to go and do the job according to my bid and I would expect them to do the same."

Defendant refused to do the paving work for less than $ 15,000. Plaintiff testified that he "got figures from other people" and after trying for several months to get as low a bid as possible engaged L & H Paving Company, a firm in Lancaster, to do the work for $ 10,948.60.

The trial court found on substantial evidence that defendant made a definite offer to do the paving on the Monte Vista job according to the plans and specifications for $ 7,131.60, and that plaintiff relied on defendant's bid in computing his own bid for the school job and naming defendant therein as the subcontractor for the paving work. Accordingly, it entered judgment for plaintiff in the amount of $ 3,817 (the difference between defendant's bid and the cost of the paving to plaintiff) plus costs.

Defendant contends that there was no enforceable contract between the parties on the ground that it made a revocable offer and revoked it before plaintiff communicated his acceptance to defendant.

There is no evidence that defendant offered to make its bid irrevocable in exchange for plaintiff's use of its figures in computing his bid. Nor is there evidence that would warrant interpreting plaintiff's use of defendant's bid as the acceptance thereof, binding plaintiff, on condition he received the main contract, to award the subcontract to defendant. In sum, there was neither an option supported by consideration nor a bilateral contract binding on both parties.

Plaintiff contends, however, that he relied to his detriment on defendant's offer and that defendant must therefore answer in damages for its refusal to perform. Thus, the question is squarely presented: Did plaintiff's reliance make defendant's offer irrevocable?

CA(1) (1) Section 90 of the Restatement of Contracts states: HN1 "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." This rule applies in this state. ( Edmonds v. County of Los Angeles, 40 Cal.2d 642 [255 P.2d 772]; Frebank Co. v. White, 152 Cal.App.2d 522 [313 P.2d 633]; Wade v. Markwell & Co., 118 Cal.App.2d 410 [258 P.2d 497, 37 A.L.R.2d 1363]; West v. Hunt Foods, Inc., 101 Cal.App.2d 597 [225 P.2d 978]; Hunter v. Sparling, 87 Cal.App.2d 711 [197 P.2d 807]; see 18 Cal.Jur.2d 407-408; 5 Stan. L. Rev. 783.)

CA(2) (2) Defendant's offer constituted a promise to perform on such conditions as were stated expressly or by implication therein or annexed thereto by operation of law. (See 1 Williston, Contracts [3d ed.], § 24A, p. 56, § 61, p. 196.) Defendant had reason to expect that if its bid proved the lowest it would be used by plaintiff. It induced "action . . . of a definite and substantial character on the part of the promisee."

Had defendant's bid expressly stated or clearly implied that it was revocable at any time before acceptance we would treat it accordingly. It was silent on revocation, however, and we must therefore determine whether there are conditions to the right of revocation imposed by law or reasonably inferable in fact.

In the analogous problem of HN2 an offer for a unilateral contract, the theory is now obsolete that the offer is revocable at any time before complete performance. Thus section 45 of the Restatement of Contracts provides: "If an offer for a unilateral contract is made, and part of the consideration requested in the offer is given or tendered by the offeree in response thereto, the offeror is bound by a contract, the duty of immediate performance of which is conditional on the full consideration being given or tendered within the time stated in the offer, or, if no time is stated therein, within a reasonable time." In explanation, comment b states that the "main offer includes as a subsidiary promise, necessarily implied, that if part of the requested performance is given, the offeror will not revoke his offer, and that if tender is made it will be accepted. Part performance or tender may thus furnish consideration for the subsidiary promise. Moreover, HN3 merely acting in justifiable reliance on an offer may in some cases serve as sufficient reason for making a promise binding (see § 90)."

CA(3) (3) Whether implied in fact or law, the subsidiary promise serves to preclude the injustice that would result if the offer could be revoked after the offeree had acted in detrimental reliance thereon.  HN4 Reasonable reliance resulting in a foreseeable prejudicial change in position affords a compelling basis also for implying a subsidiary promise not to revoke an offer for a bilateral contract.

CA(4) (4) The absence of consideration is not fatal to the enforcement of such a promise. It is true that in the case of unilateral contracts the Restatement finds consideration for the implied subsidiary promise in the part performance of the bargained-for exchange, but its reference to section 90 makes clear that consideration for such a promise is not always necessary. The very purpose of section 90 is to make a promise binding even though there was no consideration "in the sense of something that is bargained for and given in exchange."(See 1 Corbin, Contracts 634 et seq.) Reasonable reliance serves to hold the offeror in lieu of the consideration ordinarily required to make the offer binding. In a case involving similar facts the Supreme Court of South Dakota stated that "we believe that reason and justice demand that the doctrine [of section 90] be applied to the present facts. We cannot believe that by accepting this doctrine as controlling in the state of facts before us we will abolish the requirement of a consideration in contract cases, in any different sense than an ordinary estoppel abolishes some legal requirement in its application. We are of the opinion, therefore, that the defendants in executing the agreement [which was not supported by consideration] made a promise which they should have reasonably expected would induce the plaintiff to submit a bid based thereon to the Government, that such promise did induce this action, and that injustice can be avoided only by enforcement of the promise." ( Northwestern Engineering Co. v. Ellerman, 69 S.D. 397, 408 [10 N.W.2d 879]; see also Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654, 661; cf.  James Baird Co. v.Gimbel Bros., 64 F.2d 344.)

CA(5) (5) When plaintiff used defendant's offer in computing his own bid, he bound himself to perform in reliance on defendant's terms. Though defendant did not bargain for this use of its bid neither did defendant make it idly, indifferent to whether it would be used or not. On the contrary it is reasonable to suppose that defendant submitted its bid to obtain the subcontract. It was bound to realize the substantial possibility that its bid would be the lowest, and that it would be included by plaintiff in his bid. It was to its own interest that the contractor be awarded the general contract; the lower the subcontract bid, the lower the general contractor's bid was likely to be and the greater its chance of acceptance and hence the greater defendant's chance of getting the paving subcontract. Defendant had reason not only to expect plaintiff to rely on its bid but to want him to. Clearly defendant had a stake in plaintiff's reliance on its bid. Given this interest and the fact that plaintiff is bound by his own bid, it is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him.

CA(6) (6) It bears noting that HN5 a general contractor is not free to delay acceptance after he has been awarded the general contract in the hope of getting a better price. Nor can he reopen bargaining with the subcontractor and at the same time claim a continuing right to accept the original offer. (See R. J. Daum Const. Co. v. Child, 122 Utah 194 [247 P.2d 817, 823].) In the present case plaintiff promptly informed defendant that plaintiff was being awarded the job and that the subcontract was being awarded to defendant.

Defendant contends, however, that its bid was the result of mistake and that it was therefore entitled to revoke it. It relies on the rescission cases of M. F. Kemper Const. Co. v. City of Los Angeles, 37 Cal.2d 696 [235 P.2d 7], and Brunzell Const. Co. v. G. J. Weisbrod, Inc., 134 Cal.App.2d 278 [285 P.2d 989]. (See also Lemoge Electric v. San Mateo County, 46 Cal.2d 659, 662 [297 P.2d 638].) In those cases, however, the bidder's mistake was known or should have been to the offeree, and the offeree could be placed in status quo.  CA(7) (7) Of course, if plaintiff had reason to believe that defendant's bid was in error, he could not justifiably rely on it, and section 90 would afford no basis for enforcing it. ( Robert Gordon, Inc. v. Ingersoll-Rand Co., 117 F.2d 654, 660.) Plaintiff, however, had no reason to know that defendant had made a mistake in submitting its bid, since there was usually a variance of 160 per cent between the highest and lowest bids for paving in the desert around Lancaster. He committed himself to performing the main contract in reliance on defendant's figures. Under these circumstances defendant's mistake, far from relieving it of its obligation, constitutes an additional reason for enforcing it, for it misled plaintiff as to the cost of doing the paving. Even had it been clearly understood that defendant's offer was revocable until accepted, it would not necessarily follow that defendant had no duty to exercise reasonable care in preparing its bid. It presented its bid with knowledge of the substantial possibility that it would be used by plaintiff; it could foresee the harm that would ensue from an erroneous underestimate of the cost. Moreover, it was motivated by its own business interest. Whether or not these considerations alone would justify recovery for negligence had the case been tried on that theory (see Biakanja v.Irving, 49 Cal.2d 647, 650 [320 P.2d 16]), they are persuasive that defendant's mistake should not defeat recovery under the rule of section 90 of the Restatement of Contracts. CA(8) (8) HN6 As between the subcontractor who made the bid and the general contractor who reasonably relied on it, the loss resulting from the mistake should fall on the party who caused it.

Leo F. Piazza Paving Co. v. Bebek & Brkich, 141 Cal.App.2d 226 [296 P.2d 368], and Bard v. Kent, 19 Cal.2d 449 [122 P.2d 8, 139], are not to the contrary. In the Piazza case the court sustained a finding that defendants intended, not to make a firm bid, but only to give the plaintiff "some kind of an idea to use" in making its bid; there was evidence that the defendants had told plaintiff they were unsure of the significance of the specifications. There was thus no offer, promise, or representation on which the defendants should reasonably have expected the plaintiff to rely. The Bard case held that an option not supported by consideration was revoked by the death of the optionor. The issue of recovery under the rule of section 90 was not pleaded at the trial, and it does not appear that the offeree's reliance was "of a definite and substantial character" so that injustice could be avoided "only by the enforcement of the promise."

CA(9) (9) There is no merit in defendant's contention that plaintiff failed to state a cause of action, on the ground that the complaint failed to allege that plaintiff attempted to mitigate the damages or that they could not have been mitigated.

Plaintiff alleged that after defendant's default, "plaintiff had to procure the services of the L & H Co. to perform said asphaltic paving for the sum of $ 10,948.60." Plaintiff's uncontradicted evidence showed that he spent several months trying to get bids from other subcontractors and that he took the lowest bid. Clearly he acted reasonably to mitigate damages.  CA(10) (10) In any event any HN7 uncertainty in plaintiff's allegation as to damages could have been raised by special demurrer. ( Code Civ. Proc., § 430, subd. 9.) It was not so raised and was therefore waived. ( Code Civ. Proc., § 434.)

The judgment is affirmed.

Both ( Code Civ. Proc., § 430, subd. 9.) and ( Code Civ. Proc., § 434.) now repealed

이번 케이스 에서는 앞선 Gimbel Bros 와는 달리promissory estoppel 이
(consideration substitute로서) subcontractor's bid binding 에 적용 되었습니다.

(카페링크)These questions were raised in James Baird Co. v. Gimbel Bros.,  38 one of Judge Hand's most celebrated opinions and a warhorse of the casebooks. In this case, Gimbel Brothers, a seller of linoleum flooring, sent offers to several general contractors who were bidding to construct a building for the Pennsylvania Department of Highways. Due to an error in calculation, however, Gimbel's agent had underestimated the amount of linoleum required by about one-half. When Gimbel discovered its mistake a few days later, it telegraphed a correction to all the offerees. Unfortunately, the correction reached Baird's office only after it had submitted its general bid, which was based in part on Gimbel's. When Baird was awarded the primary contract, Gimbel refused to honor its offer.  39

Initially, Baird tried to argue that by using Gimbel's bid as the basis for its own general bid, it had accepted and entered into a mutually binding bilateral contract, albeit one contingent on its being awarded the primary contract. The language of Gimbel's bid, however, made this interpretation a difficult one.  40 Furthermore, Baird had never notified Gimbel of any acceptance, nor had it taken any publicly observable action that would have enabled Gimbel to prove an acceptance had it been the one seeking to enforce the bargain. As a result, Baird fell back on Restatement section 90.

Judge Hand, however, was unsympathetic to the estoppel argument. In his view, it was unreasonable to suppose that Gimbel meant to bind itself to perform while leaving Baird free to seek a better bargain elsewhere. Since Baird had never accepted, Hand concluded, Gimbel's offer had never ripened into the promise that was a necessary element for a section 90 claim:

An offer for an exchange is not meant to become a promise until a consideration has been received, either a counter-promise or whatever else is stipulated. To extend it would be to hold the offeror regardless of the stipulated condition of his offer. In the case at bar the defendant offered to deliver the linoleum in exchange for the plaintiff's acceptance, not for its bid, which was a matter of indifference to it. That offer could become a promise to deliver only when the equivalent was received; that is, when the plaintiff promised to take and pay for it. There is no room in such a situation for the doctrine of "promissory estoppel."  41

Hand's opinion in Baird remained the leading authority on this issue for a quarter century. In 1958, however, the California Supreme Court heard the case of (카페링크) Drennan v. Star Paving Co.  42 Star had telephoned in the low offer for pavement work on a school construction project on which Drennan was bidding to be primary contractor. Drennan used Star's bid in computing his own, and included Star's name on the list of subcontractors required by the school district's rules. Drennan won the bidding and was awarded the contract, but when he stopped by Star's office the next day, he was informed that Star's bid was mistaken and that Star could not do the paving at the price it had offered.

The court might easily have distinguished Drennan from Baird on the facts. Drennan's use of Star's bid could have been interpreted as an acceptance contingent on Drennan's winning the primary contract. There was nothing in the language of either bid to preclude this, and Drennan had publicly listed Star as one of its subcontractors. Alternatively, since Star did not inform Drennan of the mistake until after Drennan arrived at Star's office to announce that they had won the bidding, the court could have found that Drennan had accepted in time and that Star's revocation was too late. Or, the facts might have supported the conclusion that Star had not tried to revoke at all, but instead had been merely asking for a modification. The court, however, in a celebrated opinion by Justice Roger Traynor, did none of these. Instead, it based its holding on the estoppel theory Judge Hand had rejected twenty-five years earlier:

Had defendant's bid expressly stated or clearly implied that it was revocable at any time before acceptance we would treat it accordingly. It was silent on revocation, however, and we must therefore determine whether there are conditions to the right of revocation imposed by law or reasonably inferable in fact…

…

When plaintiff used defendant's offer in computing his own bid, he bound himself [to the school system] to perform in reliance on defendant's terms. Though defendant did not bargain for this use of its bid neither did defendant make it idly, indifferent to whether it would be used or not… Clearly defendant had a stake in plaintiff's reliance on its bid. Given this interest and the fact that plaintiff is bound by his own bid, it is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him.  43

Traynor's analysis in Drennan won out over Hand's analysis in Baird in subsequent contractor-subcontractor cases.  44 More importantly, however, the drafters of the Restatement (Second) of Contracts subsequently adopted and extended the logic of Drennan.