Legal Question in Business Law in California

Re: Job Estimate retracted

an offer can be withdrawn any time up until it is accepted. once an offer is accepted it becomes a binding contract.

Re: Job Estimate retracted

There seem to be two issues here:

(1) Was the 'estimate' only an estimate, or was it in fact an offer to do the work at $90?

(2) If it was an offer, once the offer is made and you accept it, can it be retracted on the basis of mistake?

There aren't quite enough facts given here for me to give you a solid opinion on #1, but even though it was called an 'estimate,' there is a good chance a court would find that it was in fact a firm offer. The surrounding facts lead to that conclusion, i.e., it was valid for 90 days, could be accepted by you doing certain things, etc. However, this is far from certain.

The law on cancelling contracts supposedly formed on the basis of mistake is somewhat complicated. The first sub-issue is whether the mistake was unilateral (only one party was mistaken) or whether both parties labored under the same misapprehension (mutual mistake). Here, the mistake would have to be unilateral. Then comes the sub-issue of whether you were aware of the mistake, or should have been aware of it. If you were, or should have been, aware that the $90 was so low that it must be a mistake, the other guy can get out of the contract IF one additional requirement is met: the mistake must be a 'mechanical' mistake like an addition error or typo, and not a judgment mistake.

If the non-mistaken party was unaware of the error, or reasonably could not have detected it, it is much harder to get out of the contract; however, if the mistaken party notifies the other party (you) before you have changed your position in reliance on the contract, the mistaken party can still rescind the contract.

The net result of all this is that the termite company would probably be allowed to escape from the contract if it can prove it really made a mechanical mistake and not a judgment mistake, unless you can prove you changed your position in reliance on the contract.

An example of 'changing position in reliance' is when a contractor bids a job in reliance on a subcontract, or maybe in your case if you have told all the other termite contractors you won't be needing their services, so they took other business and can no longer do your job because they are fully booked, etc.