Problem

A contract required submission of a bid bond for $10,000 for each proposal. The lowest bid...

A contract required submission of a bid bond for $10,000 for each proposal. The lowest bid was $500,000 and was made by Morse. The next lowest bid was $520,000 and was made by Whipple. Morse later refused to sign the contract. The owner then accepted Whipple’s proposal and awarded the contract to Whipple. (a) What is the obligation of Morse’s surety? (b) What does the owner gain or lose? Explain.

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Solutions For Problems in Chapter 18