Elsinore Union Elementary School Dist. V. Kastoroff
54 Cal.2d 380, 6 Cal.Rptr. 1, 353 P.2d 713 (Cal 1960)
- Kastoroff was a contractor that bid to add an addition to an Elsinore school. As part of the bidding process, Kastoroff made a math error in calculating his costs and wound up significantly underbidding the project. Since he was by far the low bidder, Elsinore awarded him the contract.
- Kasteroff wrote the school board informing them of his error and asking them to remove his bid. The school board refused at first but eventually relented.
- The school board hired another contractor at a higher price, and then sued Kasteroff to recover the difference.
- The school board sought to cover for breach of contract, and to mitigate damages.
- The Trial Court found for Elsinore.
- The Appellate Court reversed the decision.
- The Appellate Court noted that the case of M.F. Kemper Constr. Co. v. City of Los Angeles was very similar, and that case held that a contractor making a clerical error in computing a bid on a public work is entitled to rescind that bid.
- The error needs to be an excusable and honest mistake. If you made a mistake because you were negligent in your calculations, the contract would still be enforceable.
- The bid was not so low that it was a palpable mistake.
- Palpable mistakes are obvious to all sides (like if Kastoroff had bid $9 instead of $90k).
- Courts have almost universally held that parties can get out of contracts that have palpable mistakes.
- Since Elsinore had not suffered any damages, to require Kasteroff to perform for the mistaken amount would be unconscionable.
- There is no useful social purpose served by enforcing mistaken terms.
- The Court suggests three factors that helped Kastoroff win, even though the error was not palpable.
- Plaintiff reports the error promptly.
- The error was not so large as to be a burden on the other party.
- Contracts with public entities are more forgiving than those with private companies.