A first natural comment is that if you are "not finding anything on point", it is the kind of issue that could be worth disputing (assuming the financial aspects of the case render it worthwhile), and the case may ultimately turn on the specific facts of the case and the sympathies of a judge acting through equity.  After all, equitable reliance/estoppel issues are rather subject to discretion. 
 
That said, I am probably a little more inclined to view this as you have (i.e. your "sense . . ."). Arguing for the subcontractor, I would assert that the offeror is the master of the offer and this offeror specified the time within which acceptance had to be made. Drennan is based on equitable principles of reliance/estoppel -- here the contractor relied (per Drennan), but the contractor subsequently failed to comply with the timing terms of the offer. The main thrust of Drennan is that the offeror (subcontractor) cannot revoke the offer. This offeror (subcontractor) has not done so. To further support this, I would point out that "lapse" is not mentioned in sec. 37.
 
If I were hired to represent the general contractor, I would argue the following: (1) my invitation for bids was worded in such a way that the bid could only be submitted based on parameters dictated by me in my invitation. (Of course, this may not be factually true to the case that you are analyzing.) (2) It is unreasonable to expect a general contractor to carefully scrutinize bids to make sure they fully comply with the invitation for bids or include some unusual additional or different terms; consequently, justice/equity favors the reliance factor -- not a big deal that our notice to the sub came a little late.  
 
As to the section 43 issue ("indirect communication of revocation"), perhaps I am not understanding you, but I don't see an issue. This would seem to be of no effect in the context of reliance/estoppel. The equities of reliance would prevail -- the offeror (the sub) cannot revoke, so learning of inconsistent conduct by the sub would not substitute for communication of a revocation of this offer. 
 
Murray Levin
University of Kansas
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From: Academy of Legal Studies in Business (ALSB) Talk on behalf of Miriam Albert
Sent: Sat 12/3/2005 11:10 AM
To: [log in to unmask]
Subject: lapse and option contracts



Any thoughts on the following hypo?

A general contractor advertises for a subcontractor to pour foundations on a project the general is bidding on; the general makes it clear in the ad that it will use the lowest subcontractor bid in its own bid on the project.

Many subcontractors bid, and Sub I is the low bidder.  Sub I's offer required that to accept the offer, the general contractor must reply to the offer via fed ex within 2 business days of the general being awarded the project.

The general contractor uses Sub I's bid in calculating its own bid, and winds up awarded the job.   The general contractor then learns reliable information of definite action on the part of Sub I inconsistent with an intention to enter into the contract [Rest. 2d § 43].  I have jazzy facts for this that I won't trouble you all with, but let's assume that it's reliable information.

Here's my question - if the general contractor then sends the acceptance via fed ex, but a week late - did Sub I's offer lapse by its terms, or is it nonetheless irrevocable due to the general contractor's reasonable reliance [under Rest. 2d § 87(2)] and Drennan?

Without the lapse issue, Sub I's offer is irrevocable under Drennan and § 87(2); it's an offer that the offeror should reasonably expect to induce action of a substantial character on the part of the offeree before acceptance and which does so - so it's binding as an option contract to the extent necessary to prevent injustice.

But what result if the general contractor attempts to accept an offer it relied on, after an implied revocation, and beyond the stated terms of the offer?   In other words, which will be dispositive - the lapse [§ 41] or the option contract [§87]?  My sense is that the lapse should be controlling- but I am having trouble finding support for this idea.  § 37 provides that an offeree's power of acceptance under an option contract is not terminated by rejection, counteroffer, revocation or death or incapacity, but § 37 does not include lapse - is this meaningful?  I am not finding anything on this point, so any thoughts would be appreciated.






Miriam R. Albert
Visiting Associate Professor of Law
Hofstra University School of Law
121 Hofstra University
Hempstead, NY 11549
(516) 463-4538 phone
(516) 463-1017 fax
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