James Baird v. Gimbel Bros

James Baird [Washington contractor] v. Gimbel Bros, Inc. COURT AND DATE: U.S. Court of Appeals (1933) PROCEDURAL HISTORY: Trial Court: Directed judgement for the defendant *Appellate: Judgement affirmed ISSUE: Can the doctrine of promissory estoppel be asserted to compel performance if the promisee has not provided consideration to the promisor? TRIGGER FACTS: Gimbel Bros, Inc. (defendant) submitted a bid to James Baird Co. (Baird) (plaintiff) and other contractors, offering to supply the linoleum for a construction contract for a quoted price. Gimbel's offer stated, among other things, that Gimbel was making the offer at the stated price "for reasonable . . . prompt acceptance after the general contract has been awarded." In calculating its offer, Gimbel had underestimated by half the amount of linoleum required for the project. Upon realizing its mistake, Gimbel sent a notice to all of the contractors that Gimbel was withdrawing the old offer and would substitute a new offer to supply the linoleum for twice the price of the original offer. Before receiving Gimbel's notice of withdrawal, Baird submitted its bid for the construction contract using Gimbel’s original quoted price. Baird was awarded the construction contract. Baird formally accepted Gimbel’s original offer two days after Gimbel’s withdrawal of the offer. Gimbel refused to recognize the contract. Baird filed suit for breach of contract. PLAINTIFF’S MAIN ARGUMENTS: It was a reasonable implication from the defendant’s offer that it should be irrevocable in case the plaintiff acted upon it, that is to say, used the prices quoted in the bid, thus putting itself in a position of not being able to withdraw without great loss. DEFENDANT’S MAIN ARGUMENTS: RULE (the law): The doctrine of promissory estoppel cannot be asserted to compel performance if the promisee has not provided consideration to the promisor. HOLDING + REASONING: No. The doctrine of promissory estoppel cannot be asserted to compel performance if the promisee has not provided consideration to the promisor. Promissory estoppel protects a promisee from the harsh consequences of a promisor's repudiation of a promise after the promisee has relied on it. An offer for an exchange does not constitute a promise, and is therefore not enforceable under the doctrine of promissory estoppel, until consideration has been received. This consideration may include a counter-promise or some other bargained-for exchange. Here, there is no bilateral contract between the parties, because Gimbel's offer was revocable and was withdrawn before it was accepted by Baird. Baird could not accept Gimbel's offer merely by incorporating Gimbel's quoted price into its bid for the construction contract. Indeed, the language of Gimbel's offer contemplated the successful award of the contract and required acceptance by the contractor after the general contract had been awarded. Promissory estoppel is inapplicable on these facts, because Gimbel’s offer to supply linoleum did not become a promise upon Baird's use of Gimbel's quoted prices in its bid. Rather, the offer could only have become an enforceable promise to deliver the linoleum when Baird provided consideration by promising to take the linoleum and pay for it. Furthermore, although promissory estoppel may have been applicable if Gimbel's offer was an option (i.e., if it gave Baird the right to accept Gimbel's offer for the linoleum at the quoted prices if its bid was accepted, but it was not binding if Baird could find a better price elsewhere), there is nothing here to suggest that Gimbel intended its offer as an option. Accordingly, there can be no grounds for promissory estoppel. The decision of the trial court is affirmed.