Question

Big Mack Construction decided to tender a bid for the construction job at the Real Homes rental complex. The closing date for the bid was 4:00 pm, June 21st. Big Mack handed in its bid on June 19th. On June 21st, Big Mack realized it had made an error in its bid and wanted to revoke it. This was not communicated to Real Homes until the morning of June 22nd. Real Homes would not let it withdraw its bid. Which one of the following statements is TRUE? (1) Since Big Mack did not communicate its desire to retract its bid prior to the closing of the bidding, it entered into a Bid Contract A with Real Homes. (2) If Real Homes had a clause that stated that a bidding party must forfeit its deposit if it retracts its bid after closing, the clause would be unenforceable. (3) Big Mack can withdraw its offer at any time prior to an award being made. (4) Big Mack has 24 hours to make changes to its bid.

Answer 1

Big Mack's bid became a legally binding contract with Real Homes when it was submitted and cannot be withdrawn after the closing date. Liquidated damages clauses can be used to compensate the party who relied on the bid. Bidders should carefully review their bids to avoid errors.

Step-by-step explanation:

The correct statement is (1) Since Big Mack did not communicate its desire to retract its bid prior to the closing of the bidding, it entered into a Bid Contract A with Real Homes. When Big Mack submitted its bid before the closing date, it created a legally binding contract with Real Homes. Once the bid is submitted, a bidder is usually not allowed to withdraw it.

If Real Homes had a clause stating that a bidding party must forfeit its deposit if it retracts the bid after closing, the clause would be enforceable. In contract law, such clauses, called liquidated damages clauses, are commonly used to compensate the party who relied on the bid.

Big Mack cannot withdraw its offer after the closing of the bidding or after an award has been made. It is important for bidders to carefully review and double-check their bids before submitting them to avoid any errors.

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