“Tentative bid” lacked sufficient definition to constitute a contract

Mollie Pawlosky, Iowa Real Estate & Land Use, Des Moines Iowa, Dickinson Law Firm, Iowa Construction Law

Posted on 08/01/2016 at 12:00 AM by Mollie Pawlosky

Brian and Tracy Liphardt alleged that they entered a contract with Scott Shaw to renovate their home. After a bench trial, however, the district court categorized the document as a “tentative agreement between friends and relatives,” a “vague proposal,” and a “tentative bid,” finding that the document lacked sufficient definition to show a meeting of the minds between the parties.  On July 27, 2016, the Iowa Court of Appeals in Liphardt v. Shaw, No. 15-1746, agreed, affirming the lower court.

The document at issue included a left-hand column listing supplies and tasks for the construction project and a right-hand column listing the estimated costs. The Liphardts purchased all the materials for the project and directly paid the roofer and excavator. The Liphardts eventually paid Shaw’s employees directly.

The district court held, and the Court of Appeals agreed, that Shaw’s form listing estimated costs of the project supplies and labor was not sufficiently definite to determine the conditions of performance and what, if any, terms were breached. The document included no narrative assigning specific responsibilities to any party. The uncertainty as to responsibilities was evidenced by the fact that originally, Shaw was to purchase the materials, but the Liphardts admitted that changed before the work began.

Moreover, Shaw’s form did not cover all work to be done in the renovation. The Liphardts testified they considered additional tasks not stated on the form to be part of the project. Although Shaw did work on some of the listed tasks, the district court could not determine from the form that he alone was responsible for their completion.

The Court of Appeals ruled that although Shaw and the Liphardts may have reached a “tentative” agreement regarding the remodeling project, substantial evidence supported the district court’s finding the Liphardts had failed to establish the existence of a contract because there was no meeting of the minds.

The Liphardts had also argued before the district court that Shaw was unjustly enriched. However, the district court failed to rule on that argument, and the Liphardts failed to request an expanded ruling, such that the issue was not preserved for appeal.

LIphardt v. Shaw reminds parties of the importance of having clear and definite terms when entering into a contract; procedurally, litigants are reminded to make sure that the trial court has addressed all issues that were raised at trial.  For additional information regarding Liphardt v. Shaw, or other topics of commercial litigation, contact Mollie Pawlosky.

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