Subcontractor Not Bound By Its Bid

A masonry subcontractor was not bound by its bid to the general contractor, despite the general contractor’s reliance upon it, since the subcontractor reasonably objected to terms and conditions of the written subcontract which it refused to sign. What was objectionable to the subcontractor was a time-of-the essence clause requiring it to meet a strict time schedule. After completing the work with a replacement subcontractor at greater cost, the general contractor sued the original subcontract bidder to recover the excess costs.

In ruling for the defendant, bidder, the court acknowledged that the general rule is that a subcontractor is bound by its bid if the general contractor relied upon it in its own successful bid for the prime contract. It held, however, that a subcontractor is not required to honor its bid if the general contractor subsequently proposes an unreasonable contract.

In this case, there was testimony on behalf of the defendant by a masonry subcontractor with 25 years experience. He testified that time-of-the essence clauses in subcontracts are routinely negotiated between the general contractor and its subcontractor to reach a mutually agreed upon schedule, but that if the general contractor imposes an unreasonable schedule, a subcontractor will typically decline to execute the subcontract. Based on evidence that the schedule imposed by the general contractor was unreasonable, the court held that the bidder was not bound by its subcontract bid. Lichtenberg Construction v. Paul W. Wilson, Inc., 2001 Ohio App. LEXIS 4372.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 4, No. 3 (Mar 2002).

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