bid

A bid is an offer to perform a contract for work, labor, or supplying materials at a specified price. A bid does not create rights in either the offeror or the offeree until the offeree voluntarily accepts the bid.

Some common uses of the term “bid” regarding contracts include:

• “Bid peddling” happens when subcontractor A purposely chooses not to enter a bid, wait for subcontractor B to pay for the estimate and make an offer, and then offer to perform the work at a lower price. This also allows the subcontractor A to avoid the estimating costs already paid by subcontractor B.
• “Bid shopping” happens when the general contractor , after receiving a bid from a subcontractor, pressures other subcontractors to submit lower bids
• “Bid rigging” happens when competitors conspire to raise prices of their goods or services to gain more profit . Bid rigging is a violation of the Sherman Antitrust Act .

[Last reviewed in June of 2021 by the Wex Definitions Team ]