Enforcement of Subcontractor Bids to the General Contractor

General contractors (aka prime contractors) do not normally perform all the work on a construction project. Rather, it is parceled out to various subcontractors with specialities in the necessary areas. For example, a different subcontractor can be used for the plumbing, roofing, framing, grading, and landscaping, to name a few. In order to submit its own bid to the owner for a construction project, the general contractor will utilize the chosen bids from each of the subcontractors. A simplified scenario is: 1) an owner calls for bids on a construction project, 2) a general contractor seeks procurement of the contract, 3) the general contractor calls for competitive bids for each of the necessary services for the project, 4) subcontractors submit bids to the general contractor to perform certain services, 5) the general contractor selects a bid from each subcontractor for whom services will be utilized in the project, 6) the general contractor takes the chosen bids and incorporates them into a "master" bid, 7) the "master" bid is submitted to the owner.

The above scenario demonstrates the impetus for a general contractor to hold a subcontractor to his bid. Should a subcontractor back out of a bid after the general contractor has been awarded the construction contract, the general contractor will be faced with any shortfalls emanating from the subcontractor's refusal to perform. Though no written subcontract agreement has yet been entered, the general contractor may still have recourse against the subcontractor through the doctrine of promissory estoppel.

To recover by way of promissory estoppel, the general contractor must first prove that the subcontractor's "promise" to perform the work outlined in the bid for the price that was stated in the bid was clear and unambiguous. This might entail showing that the bid price was not just an estimate, but the actual and final cost.

Second, the general contractor must prove that it relied on the subcontractor's "promise." Using the scenario above, this could be shown by presenting the general contractor's "master" bid and demonstrating the use of the subcontractor's bid therein.

Next, it must be shown that the general contractor's reliance was reasonable and foreseeable by the subcontractor. The general contractor can present evidence that it followed ordinary construction industry practice of incorporating subcontractor bid information into its "master" to a general contractor. Additionally, reasonable reliance on the subcontractor's "promise" would be evidenced by showing that the bid contained no obvious mistakes. Presenting evidence that the subcontractor knew its bid would be utilized in the general contractor's "master" bid to the owner and that, perhaps, it knew there were no other subcontractors available to perform the work at issue would demonstrate that the general contractor's reliance was foreseeable.

Finally, the general contractor must prove that as a result of the general contractor's reliance, he has been damaged. Damages may take the form of reliance damages or may extend to the enforcement of the subcontractor's "promise" if that would be a just result.