By Jon Straw
For over 125 years, the vast majority of jurisdictions have refused to bind contractors to erroneous bids. In 1900, the U.S. Supreme Court reasoned that a bidder should not be bound to a clerical mistake because, if that happens, there could be no meeting of the minds to create a contract. Moffett, Hodgkins & Clarke Co. v. Rochester, 178 U.S. 373 (1900).
In that case, an “extremely nearsighted” engineer, working in the haste and confusion of bid preparations, mistakenly transcribed his bid figures. Allowing the bidder to withdraw its bid simply returned the public entity to the status quo as if there had never been a bid. This sort of mistake is a unilateral mistake in fact, without intent.
Since this decision over a century ago, most jurisdictions have enacted some form of statutory framework allowing withdrawal or rejection of a bid upon proof of certain conditions. West Virginia enacted its four conditions in 2003.
The four conditions under West Virginia law are: an error was made, the error materially affected the bid, rejection of the bid would not cause hardship to the public entity and enforcement of the bid error would be unconscionable.
In West Virginia, if the lowest bid is withdrawn or rejected, then the public entity may accept the next lowest bid.
In a matter of first impression, the West Virginia Intermediate Court of Appeals held that a government agency must reject a bid proposal if the bidder timely declares an error and the bidder proves the required conditions. West Virginia Department of Transportation, Division of Highways v. Olympus Painting Contractors, Inc., Case No. 24-ICA-183 (Feb. 20, 2025).
This case involved a project to repair and repaint the Veteran’s Memorial Bridge in Brooke County, W.Va. At bid opening, the lowest bid was nearly 22% less than the next lowest bid.
After bid opening, but before award, the lowest bidder asked the WVDOT to reject the bid because of a clerical mistake resulting in a bid error – a handwritten “9” was mistakenly transposed or interpreted as a “5.”
On the same day, WVDOT refused to reject the bid and notified the bidder of the award decision. The bidder refused to sign the contract so WVDOT sought to enforce the bid bond.
When the surety refused to pay, WVDOT sued the bidder. The trial court held for the bidder. WVDOT appealed.
On appeal, the court explained that the bidder cannot simply withdraw the bid without a showing that certain conditions are met by a preponderance of the evidence (i.e., more likely than not or at least 50.1%).
The trial court had already decided that three of the four conditions were met, so the appellate court remanded to the trial court only to decide if the first condition was met.
The fourth condition (unconscionability) is somewhat amorphous. Although “fairness” in contracting depends almost entirely on the contract (because the contract memorializes the parties’ pre-agreement and pre-determination as to what is “fair”).
Nevertheless, the legal doctrine of unconscionability may apply under unfair or oppressive circumstances. As you would imagine, the law has used many words to describe unconscionability. For example, it has been described as something that “no man in his senses and not under delusion would make on the one hand, and as no honest and a fair man would accept on the other.”
Numbers alone cannot decide whether something is unconscionable, but some cases have relied heavily on losses of 10% to show something is unconscionable.
Merely underbidding by nearly 22% from the next lowest bidder did not matter. What mattered was within the boundaries of the mistaken bid itself. Here, the bidder’s owner testified that understatement of its bid by about 14% was “catastrophic.”
Amidst the tumult bid prep, mistakes can be made. But there is hope, under the right conditions. RB
Jon Straw is a partner with Kraftson Caudle, PLC, a law firm in McLean, Va., specializing in heavy-highway and transportation construction. Straw can be contacted via e-mail at [email protected].
