A general contractor invited subcontractors to submit bids for mechanical work in the construction of a large office building. Several written bids were received by the contractor, as well as a telephone call from a sub-contractor who responded with a bid about 12 percent below the lowest bid price of the written submissions. All written bids were within one percent of each other.

The subcontractor who submitted the telephone bid checked his estimates the day following the telephone call. He discovered that he had made an error in his calculations, and immediately called the contractor to withdraw his bid. Unfortunately, the contractor was out of town, and the subcontractor could not reach him at his office. However, he left a message with the contractor's administrative assistant to the effect that his bid was in error, and that his bid price for the contract would be 13 percent above the figure quoted on the telephone.

The contractor, while out of town, prepared his contract price for the construction of the building, using the original telephone bid price for the mechanical work. He was awarded the construction contract. When he returned to the office, his secretary informed him of the subcontractor's error.

The subcontractor refused to enter into a written contract or to perform the mechanical work at the original price. The contractor was obliged to get the work done by the subcontractor who had submitted the next lowest bid. When the contract was fully performed, the contractor brought an action against the telephone bidder for the difference between the contract price quoted on the telephone and the actual cost incurred in having the work done.

Discuss the arguments that might be raised by the parties in this case. Render a decision.