The Indiana Court of Appeals recently considered when a contractor may be relieved from a bid on a public works project. In the case considered by the Court, a construction company forwarded a bid for certain improvements to a school, together with the required bid bond. On the day the bids were opened, the contractor determined that a math error had occurred in the calculation of its bid and immediately informed the school corporation. The contractor also called the school corporation shortly after bid opening to say that there had been a mistake and to ask that its bid be withdrawn. The school corporation decided to hold the contractor to its bid amount and litigation ensued.
In a suit by the contractor seeking the rescission of its bid and to release its bid bond, the Court of Appeals held that a determination of the case turned on whether or not the bid mistake was the result of a clear cut clerical or arithmetic error or from a misreading of the specifications of the bid on one hand versus mistakes of judgment on the other. Mistakes of judgment, the Court held, do not qualify for relief from the bid while clerical and math errors or misreading of specifications would generally allow relief. In this particular instance, the Court held that the error was mathematical in nature and released the contractor from liability. Likewise, the Court held that the bid bond surety would be released as its liability was solely derivative from the contractor’s liability.
Author: Terry G. Farmer (bio)
Email: [email protected]