You’ve been awarded the bid on a project and you let all your subs know that you were awarded the job. But, what do you do about that subcontractor that says, glad to hear it, but we can’t do your job anymore. The knee jerk reaction is to tell the subcontractor that he’s bound to do the job. But is he?
Submitting a Bid
In order to have a binding contract, you need a meeting of the minds on all major aspects of the job. A subcontractor’s bid may bind him to do the job. But, a change in circumstance can create some questions about whether there was a meeting of the minds. For example, if the subcontractor submitted a bid to do work on a 5,000 square foot project and the project was changed to a 10,000 foot project, but no one told the subcontractor, there will be a real question about whether the subcontractor is bound to do the job. Similarly, if the subcontractor submitted a bid with an anticipated start date of January 1, and the project was delayed to April 1, again there may be a real question as to whether the subcontractor agreed to do work in April.
Avoiding the Problem
To avoid this problem, a general contractor should have someone designated to communicate any changes to the subcontractor and include a sign-off sheet requiring the subcontractor to acknowledge and agree to the change in the scope of work. To avoid problems with a later start date, you could include language in the bid package that the start date is anticipated to be January 1, but could start 120 days later. A subcontractor that submits a bid will be harder pressed to back out of a later start date when he knew about the potential of a late start when he submitted the bid.
As we have said time and time again, communication is key. Communicating with your subcontractors up front and during the bid process will keep problems to a minimum and better allow your projects to proceed smoothly.
All good reminders Craig. Better communication always leads to better relationships and fewer problems
I had a case once where the subcontractor started working on the project, but then refused to sign the general contractor’s proposed subcontract. So, they were terminated from the job. The general contractor wanted to sue for the additional cost of the replacement subcontractor, but I counseled against that because – as you point out – there was no binding contract in place (the bid documents did not require entering into the proposed subcontract).
The good news is we went to trial against the subcontractor (who proceeded – properly – on a quantum meruit theory) and won on a directed verdict because the subcontractor failed to offer required expert testimony on the reasonable value of the work that was performed!