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Most legally enforceable contracts are formed the old-fashioned way: offer and acceptance. Courts will sometimes enforce promises without traditional offer and acceptance where one party has justifiably relied on the other party's promise. This alternative route to contract formation is called promissory estoppel. While the law varies from state-to-state, prevailing on promissory estoppel theory normally requires (1) a promise that (2) the promisor should reasonably expect to cause the promisee to change its position and (3) that causes the promisee to change its position (4) justifiably relying upon the promise, in such a manner that (5) injustice can be avoided only by enforcement of the promise.
Promissory estoppel arises frequently in the construction setting. When submitting bids to the owner, general contractors often rely on bids obtained from subcontractors without a formal, signed subcontract. If the subcontractor later attempts to back out, courts may nonetheless enforce the subcontractor's bid under the doctrine of promissory estoppel. A decision released last month in the state of Washington is a good example of how this works in practice (see McClure and Sons, Inc. v. Stetner Electric, Inc., No. 87564-7-I, 2026 WL 195157 (Wash. Ct. App. Jan. 26, 2026)).
McClure and Sons involves a project to modify a pump station owned by the city of Everett, Washington. To prepare its bid to the city, the general contractor solicited bids from various electrical subcontractors. The lowest-bidding electrical subcontractor submitted multiple "final" bids just minutes before the general contractor's deadline to submit its bid to the city. The electrical subcontractor's last bid increased the price by over $100,000 and was submitted some 32 seconds after the general contractor's "absolute drop dead time" for receiving and incorporating subcontract bids. When submitting its bid to the city, the general contractor relied on the subcontractor's previous bid, submitted minutes earlier, at a lower price. After the city awarded the job to the general contractor, the electrical subcontractor attempted to withdraw its prior bid and refused to perform the work. The general contractor ultimately hired another electrical sub to cover at an excess cost of over $300,000. Litigation ensued.
The subcontractor argued its bid was conditional on acceptance within seven days, which never occurred. The general contractor argued that it justifiably relied on the subcontractor's bid when submitting its winning bid to the city and that under the doctrine promissory estoppel the subcontractor's bid was legally binding. The trial court sided with the general contractor, and the appellate court affirmed, reasoning as follows:
Promissory estoppel applies readily to the unique situation of a subcontractor and a general contractor. A subcontractor submits a bid to a general contractor, knowing the general cannot accept the bid as an offer immediately, but must first incorporate it into the general's offer to the prospective employer. The general contractor then incorporates the bid in reliance upon the subcontractor to perform as promised, should the prospective employer accept the general's offer. A subcontractor's bid is considered an irrevocable offer until the award of the prime contract; then the general contractor's acceptance of the bid results in a bilateral contract. If the subcontractor breaches this bilateral contract, it is required to pay as damages the difference between its bid and the higher price the general had to pay another subcontractor to perform the work.
While the outcome of any case depends on the particular facts and law, McClure and Sons is a good reminder that promissory estoppel may carry the day when traditional contract analysis does not. A full copy of the court's opinion is available here.
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