Holman Erection v. Madsen (1983)


– Madsen was awarded a contract to do business and left out Holman.
– Even though Holman won the preliminary bid for lowest bid, Madsen did not pick Holman to perform the deal.
– Sued Madsen saying that he accepted the sub-bid.

Plaintiff’s argument

  • Listing Holman as the sub-contractor, as required by authority, constitutes acceptance.
  1. No other reasonable explanation for the act.
  2. Unfair to bind Holman to the bid and bind Madsen.
  3. Madsen knew general bid was public knowledge, inference can be drawn that Madsen intended to accept Holman’s offer and communicated assent by listing Holman in the general bid.

Procedural History

–          Trial court awarded summary judgment for Madsen and Holman appealed

–          Re-affirmed in appellate court.


–          Are general contractors bound to sub-contractors bids?


–          NO.


–          Sub-contractor may be obligated to perform by application of  primary estoppel.

–          General contractor is not obligated to perform a sub-contractors bid.


–          General’s reliance on sub-contractor.

  • Justifiable reliance by the general on the sub-contractor’s price for specified work- general is bound to his own bid, which makes the sub- bound to the general
    • Subject general to financial detriment

–          Sub-contractor does not rely on General

  • Suffers no detriment
    • Submits bids to all, or almost all Generals that are working on a particular project.
    • Total cost is overhead of conducting business…don’t lose money…same bid throughout process…same work and expenses regardless.

–          Context

  • Nature of bidding process allows generals sufficient leeway to maintain flexibility in executing sub-contractors on a job.
  • General’s bids are hectic, last minute, prevents bid-shopping.
  • Sub-contractors are meticulous , entered way before General submits his bid.
  • Not only lowest price wins- reliability, capability, quality of work are all factored in….Also the use of MBE.
  • If bound to bids listed in its prime, contract could fail to due complying with MBE regulations.


– Affirmed

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