General Contractor Unable to Enforce Subcontract Bid Which Disclaimed Intent to Be Bound

Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc.
2007 U.S. App. LEXIS 7808 (3d Cir., Apr. 5, 2007 )

The United States Court of Appeals for the Third Circuit held that, despite the commercial practice to the contrary, a subcontractor was not bound by the qualified bid it submitted to a general contractor. The subcontractor’s bid plainly stated that the price was for information purposes only and should not be relied on by the recipient.

General Contractor Fletcher-Harlee solicited subcontract bids for concrete work. As is an industry custom, Fletcher-Harlee stated in its solicitation letter that bids must be held open for a minimum of 60 days and also that the subcontractor must agree to be accountable for the prices and proposals submitted. Pote Concrete Contractors submitted a written bid. However, Pote included a disclaimer in its submission. In the bid, Pote stated that the price quote was for informational purposes only, was not a firm offer, should not be relied on and that Pote did not agree to be held liable for any of the terms that it submitted.

Despite the limitations in Pote’s bid, Fletcher-Harlee relied on the bid in preparing its general bid. When Fletcher-Harlee sought to enter into a written contract based on the terms Pote initially submitted, Pote refused to be bound and raised its price. As a result, Fletcher-Harlee was forced to use a different concrete subcontractor, increasing its cost on the job by $200,000.

Fletcher-Harlee brought suit in the United States District Court of New Jersey under the theories of breach of contract and promissory estoppel. The district court granted Pote’s motion to dismiss both claims. Fletcher-Harlee appealed to the Third Circuit.

On appeal, the Court applied basic principals of contract interpretation in affirming the motion to dismiss both claims. Following the contract principle that documents must be interpreted based on their plain meaning, the Court reasoned that “[w]hen the text of a subcontractor’s bid, which would typically be a firm offer, specifically states that it is not one, we must follow that text.” The Court’s rationale was that Fletcher-Harlee’s bid solicitation was not an offer, but was merely a request to submit an offer. Likewise, Pote’s response was not a firm offer, but was nothing more than a counteroffer since its terms materially differed from Fletcher-Harlee’s solicitation letter. Critical to the determination that Pote’s submission was not an offer was Pote’s disclaimer of intent to be bound by its submission. Without an offer and acceptance, there was no contract for Pote to breach.

Dismissal of the promissory estoppel claim was also appropriate because the because, in light of the disclaimers, Fletcher-Harlee’s reliance on the bid was not reasonable–a key element in establishing promissory estoppel.

Click here to view full opinion as PDF (provided with the permission of LexisNexis).

This entry was posted in Breach of Contract, General Contractor, Subcontract and tagged , , , , . Bookmark the permalink.