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FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO

FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO. What was the nature of Barber's mistake?

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FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO

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    1. FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO What was the nature of Barber’s mistake?

    2. FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO What was the nature of Barber’s mistake? “[T]he mistake in Barber’s bid was caused by an error in totaling the material costs on page 3 of Barber’s estimate work sheets. The subtotal of the material cost listed on that page is actually $137,990. The total listed on Barber’s summary sheet for the material cost subtotal was $19,214. The net error in addition was $118,776. After adding in mark-ups for sales tax (4 percent), overhead and profit (15 percent), and bond procurement costs (.75 percent), the error was compounded to a total of $143,120.”

    3. FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO “The question for decision is whether Barber was entitled to rescind its bid upon discovering that it was based upon a miscalculation or whether Barber should forfeit its bond because it refused to execute the contract following the acceptance of its bid by the church.”

    4. §153. When Mistake of One Party Makes a Contract Voidable Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in §154, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.

    5. §154. When a Party Bears the Risk of a Mistake A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

    6. Corbin on Contracts “Suppose . . . a bidding contractor makes an offer to supply specified goods or to do specified work for a definitely named price, and that he was caused to name this price by an antecedent error of computation. If, before acceptance, the offeree knows, or has reason to know, that a material error has been made, he is seldom mean enough to accept; and if he does accept, the courts have no difficulty in throwing him out. He is not permitted ‘‘to snap up’’ such an offer and profit thereby. If, without knowledge of the mistake and before any revocation, he has accepted the offer, it is natural for him to feel a sense of disappointment at not getting a good bargain, when the offeror insists on withdrawal; but a just and reasonable man will not insist upon profiting by the other’s mistake.

    7. Citing M. J. McGough Co. v. Jane Lamb Memorial Hospital The prerequisites for obtaining such relief are: (1) the mistake is of such consequence that enforcement would be unconscionable; (2) the mistake must relate to the substance of the consideration; (3) the mistake must have occurred regardless of the exercise of ordinary care; (4) it must be possible to place the other party in status quo. It is also generally required that the bidder give prompt notification of the mistake and his intention to withdraw. . . .

    8. Citing M. J. McGough Co. v. Jane Lamb Memorial Hospital “The Hospital has lost only what it sought to gain by taking advantage of [the contractor’s] mistake. Equitable considerations will not allow the recovery of the loss of bargain in this situation.”

    9. Apply to this case “In the case sub judice, Barber, the contractor, promptly notified the plaintiff that a mistake was made in calculating the amount of the bid. The plaintiff had actual knowledge of the mistake before it forwarded a contract to Barber. The mistake was a ‘‘simple clerical error.’’ It did not amount to negligence preventing equitable relief. Furthermore, it was a mistake which was material to the contract - it went to the substance of the consideration. (The mistake amounted to approximately 7 percent of the bid.) To allow the plaintiff to take advantage of the mistake would not be just.”

    10. Apply to this case BUT what about these?

    11. FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO The bid letters: ‘‘Negligence on the part of the bidder in preparing the bid confers no right for the withdrawal of the bid after it has been opened.’’ ‘‘For and in consideration of the sum of $1.00, the receipt of which is hereby acknowledged, the undersigned agrees that this proposal may not be revoked or withdrawn after the time set for the opening of bids but shall remain open for acceptance for a period of thirty-five (35) days following such time.’’

    12. FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO Barber’s letter also contained a promise to enter into a contract within ten days of being selected as having won the bid. Bond says: “‘‘If this proposal is accepted within thirty-five (35) days after the date set for the opening of bids and the undersigned [Barber] fails to execute the contract within ten (10) days after written notice of such acceptance . . . the obligation of the bid bond will remain in full force and effect and the money payable thereon shall be paid into the funds of the Owner as liquidated damages for such failure.’’

    13. FIRST BAPTIST CHURCH OF MOULTRIE v. BARBER CONTRACTING CO ‘‘[P]rovisions such as these have been considered many times in similar cases, and have never been held effective when equitable considerations dictate otherwise.’’

    14. Problem 116 When computing its bid on the new schoolhouse, Careless Construction Company turned two pages of its estimate book at once and thereby accidentally omitted a huge portion of the true amount of its bid. Other bidders bid amounts ranging from $2,500,000 to $3,000,000. Careless’s bid was $1,250,000, and the school board snapped it up by an immediate acceptance. Performing at this low rate will put Careless into bankruptcy. Is there relief in the law of mistake? Will it help Careless if the school board unduly rushed it, while giving the other bidders greater time in which to compute their bids?

    15. Problem 117 How would your answer change, if at all, if Careless had made a bid of $1,250,000, not because of missing pages in the estimate, but because Careless believed that the work could be completed in five months rather than the six months that were actually required?

    16. Problem 118 When Careless Construction Company discovered that it had made a mistake that lowered its bid by $4,000, it nonetheless decided to go through with the project and accept the loss. The second lowest bidder was the Prudent Construction Company; its bid was $2,000 higher than that of Careless. Arguing that it would have been awarded the contract if Careless’s mistake were taken into account, Prudent demanded that Careless’s contract be voided for mistake and that Prudent be awarded the job. Is this argument valid?

    17. Problem 119 To help with a charity golf tournament, the Klick-Lewis car dealership donated a new Chevrolet Beretta GT and placed it on the ninth tee with a sign saying ‘‘HOLE-IN-ONE Wins this car courtesy of Klick-Lewis, Inc.’’ No one made a hole-in-one during the tournament. Two days later, before Klick- Lewis got around to removing the car or taking down the sign, Amos Cobaugh was playing in another tournament on the same course and made a hole-in-one on the ninth hole. Is he entitled to the car? Did he furnish sufficient consideration for it?

    18. § 2-312. Warranty of Title and Against Infringement; Buyer's Obligation Against Infringement. (1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that (a) the title conveyed shall be good, and its transfer rightful; and (b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge. (2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have. (3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.

    19. § 2-313. Express Warranties by Affirmation, Promise, Description, Sample. (1) Express warranties by the seller are created as follows: (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. (c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. (2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

    20. 2-314. Implied Warranty: Merchantability; Usage of Trade. (1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. (2) Goods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promises or affirmations of fact made on the container or label if any. (3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade.

    21. § 2-315. Implied Warranty: Fitness for Particular Purpose. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

    22. § 2-316. Exclusion or Modification of Warranties. (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable. (2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof."

    23. (3) Notwithstanding subsection (2) (a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is", "with all faults" or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty; and (b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and (c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade. (4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (Sections 2-718 and 2-719).

    24. Problem 114 Honest John told Mr. and Mrs. Consumer that the used car he was selling them was in ‘‘great condition and was never mistreated by its prior owner, a nun.’’ In fact, unknown to Honest John, the nun had been a bad driver and repeatedly wrecked and repaired the vehicle. The Consumers signed a contract of sale which conspicuously stated there were ‘‘no express or implied warranties, particularly not the implied warranty of MERCHANTABILITY’’ (see later), involved in the sale. Two days later the car fell to pieces because of its many prior accidents, and the Consumers were injured. May they sue for breach of express warranty? See UCC §§2-316(1), 2-202, 2-302, and 1-103. Does it help Honest John that he did not know nor have reason to know of the car’s defects?

    25. Problem 115 The restaurant menu had beautiful photographs of the food. When Portia Moot and her friend Ralph Res were ready to order, Portia pointed at the picture of the plate of spaghetti and told the waitress, ‘‘I’ll take that.’’ Ralph ordered fish chowder.

    26. Problem 115 (a) When the food arrived, Portia was annoyed to note that there were only two meatballs (the picture showed three). May she refuse the food for this reason? Is the service of food a sufficient sale to trigger the UCC? See UCC §2-314(1). (b) If Ralph chokes on a bone in the fish chowder, what commercial theory will offer possible relief to him or his heirs? Is the question easier if the offending object in the fish chowder is a piece of gravel?

    27. Problem 115 (c) If the water glass that Portia is holding proves to be defective and suddenly shatters, lacerating her hand, does any part of UCC §2-314 apply? (d) Assume that Portia told the waitress that she was allergic to milk and asked her to make sure that the dishes she was served contained none. The waitress made no express promise (indeed, she said nothing when Portia gave her this information), but the food Portia was served made her very sick because it was laced with milk. May she sue in warranty? See UCC §2-315.

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