A fundamental principle of contract law is that a valid contract requires a “meeting of the minds” between the contracting parties concerning the essential terms of the contract. There must be mutual assent – the intent of the parties is key. If the offeror has clearly manifested a willingness to enter into a contract in such a way that the other party, the offeree, knows that assent is all that is necessary to cement the deal, and the offeree accepts, the requisite mutual assent exists. But, if the offeree changes the terms of the offer in their acceptance, does a contract exist? That is what was involved in this case.
Here, a general contractor submitted a bid to build a Wal-Mart. The general contractor publicly sought subcontractors to submit bids for certain parts of the construction. One subcontractor saw prepared a bid for doing the “rock sub-base” work (parking lot preparation) on the project. The general contractor had never worked with the subcontractor on a project of this kind and, ultimately, asked the subcontractor to revise his bid to include some additional work. When the general contractor was awarded the project, he called the subcontractor and it was agreed over the phone that the subcontractor’s work would be done for $400,000. The general contractor drafted a written agreement and sent it to the subcontractor.
But, confusion resulted. The subcontractor believed that the bid was for the hauling of 8800 tons of rock sub-base while the general contractor believed the bid was for completion of the entire project (the subcontractor had written the modification on the original contract that he would only haul 8800 tons and the contractor signed the contract but failed to notice the written modification.) The project commenced and when the subcontractor hauled 8800 tons of rock sub-base, he notified the contractor and asked for a new contract to complete the project. The contractor disagreed, stating that he had agreed to complete the entire job. The parties could never agree on a contract to complete the job and a lawsuit ensued.
At trial, the court found that there was no “mutual agreement” between the parties in the original contract, but did order that the subcontractor should be paid for work completed and calculated that amount based upon evidence of communication between the contractors. The subcontractor appealed, claiming that the trial court did not correctly calculate payment owed to him.
On appeal, the court determined that the subcontractor had rejected the original contract and submitted a counteroffer. However, they also found that the general contractor did accept the terms of the counteroffer by staying silent and permitting the subcontractor to begin work. Thus, failing to read the contract prior to signing does not necessarily mean the contract is invalid. The court found the original contract to be binding upon the parties and the parties’ subsequent communication to complete the job also constituted a separate contract. The court agreed with the damages assessed by the trial court and remanded the case merely for the correction of a technical calculation error. L & L Builders Co., v. Quirk, No. 0-099/09-1311, 2010 Iowa App. LEXIS 250 (Iowa Ct. App., Mar. 24, 2010).