Proposal or Contract

Half of the work has bben DONE?

Then is would be assumed that you have a "contract."

It never fails that someoe turns up later with a lower bid and claims of how the Board got a bad deal. This contractor held with you for 2 years; that counts for something.

Since you SHOULD have gotten several bids a long time ago for the original job, what was chosed was in line at the time, right?

Let me take a stab at this. A valid contract requires three elements: an offer, an acceptance and an exchange of value. There was an offer and it appears there was an acceptance, but no exchange of value, although there appears that there may have been an implicit promise of payment by seeking a loan.

The question here depends on if the vote by the board constitutes an acceptance.? Technically, signatures are not required. However, California law regulating contractors and construction contracts may be able to tell you if a contract is valid without signatures.

It boils down to this: if the contractor incurred costs (such as purchasing inventory or scheduling workers) on the basis of the vote of the board of and with the expectation of compensation, and the board was aware that the contractor was moving forward to incur costs, then a contract likely exists.

A related question is, was it reasonable under the circumstances for the contractor to incur costs in reliance on the board vote? It appears that it may have been reasonable.

I think the original contractor has a legitimate grounds for a lawsuit. Whether he will prevail or not, depends on the particular facts of the case and specific laws in California.

I think your property manager is offering the best advice. You may find it in your best interest to go forward with the original contractor and chalk up the extra expense to a hard lesson learned.

If the contractor had no knowledge of the vote of the board of directors, then no contract would exist, and it would remain a proposal. So how did this contractor learn of this vote?

In reading through this I would say that you are morally obligated to honor your commitment to the first contractor. But before you go and tell your residents about some mistake you assume you made think about the following:

1. Did you get competitive bids at the time? (If so, then you should have reasonable assurance of that the price was good at the time. If not, then you should have done so and should do so on any major item.)


2. Any chance that the perosn offering this new offer saw what you are paying? (If so, then this is not a competitive bid process. I suspect that the person had a good idea of what was being paid.)


3. Have you considered that the price of a bid may be lower today then last year? (With new home construction lagging contractors are getting hungry. So are suppliers. In fact, one of our board members made the move to become a builder recently because now he can get the materials at the same cost as the big names.)

In short, I would advise even addressing this in front of the members if the person presenting the bid had any knowledge of the current cost. If the issue comes up, you tell the owners this was not a blind bid. Further, you had already accepted the first bid and as such are obligated to retain him (or face stiff penalties for breaking the contract).

As I see it, that someone would try this tactic is a bigger problem then the contractor who is friends with the president. Everyone always bids to make a profit. But to use inside knowledge to game the bidding process is unethical.

Sandy,

George summed up contract law nicely.

I'd say you've got one.

And as you shopped bids before accepting, the Board has nothing to be ashamed of. They did their job. No rip off that I can see.

Plus, that HO's father offered a (I imagine) sweetheart deal as an favor/accomodation, it's a bit too late in the process to take advantage of it.