Moffett, Hodgkins & Clarke Co. v. Rochester
Headline: Court allows contractor to seek correction of a clerical bid mistake in public works contracts, reverses the appeals court and affirms the trial court, protecting the bidder from forfeiture and unfair enforcement.
Holding: The Court reversed the appeals court and affirmed the trial court, ruling that clear clerical mistakes in a public works bid justified equitable correction instead of forcing the bidder to accept an unremunerative contract or pay liquidated damages.
- Allows bidders to seek correction of clear clerical bid errors in public contracts.
- Prevents cities from forcing bidders to accept unprofitable contracts when mistakes are shown.
- Encourages prompt notice and equitable review to avoid unfair forfeiture or penalties.
Summary
Background
A contractor submitted bids for city public-works contracts and later discovered clear clerical errors in its proposals. One error underpriced earth excavation and another omitted related tunnel costs. The city board read the bid, accepted other contractors, and pressed the contractor to take the work at the mistaken price or face $90,000 in liquidated damages. The contractor filed a bill in equity and obtained temporary restraints while asking a court to decide its rights.
Reasoning
The Court examined whether the written proposals reflected the real intent of the parties and whether a clear mistake justified correction. It explained that equity can correct written contracts when they omit the parties’ true agreement and when the mistake is shown plainly. The trial court found the errors were clerical and the contractor had promptly declared them; the appeals court disagreed on one item, calling it negligence. The Supreme Court reversed the appeals court and affirmed the trial court, concluding the errors were not deliberate unbalanced bidding, that no binding contract had been formed on the mistaken terms, and that the city’s later actions prevented the fair correction of the proposals.
Real world impact
The ruling lets a bidder ask a court to correct obvious clerical mistakes in public bids instead of being forced to perform at an unprofitable price or pay large liquidated damages. It also highlights that prompt notice of a mistake and taking the issue to a court can preserve a bidder’s right to relief. The decision is about the specific bids and procedures in this case and applies where the record shows a clear, mutual mistake.
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