Quote of a price: legally binding
How often have consumers and buyers found ourselves in labor or service negotiations on the receiving end of a quote? ‘Most of the time’ would be a common response and observation. First-time home buyers, for example, love to search for quotes before taking the plunge. After purchasing the perfect home, painters and contractors are hired. These service providers usually make a quote before offering their services. This has become the norm.
Receiving a quote is a comforting thought. Offers options and security. It allows parties to make informed decisions based on their income. However, a simple quote can turn into a contract in some situations. The recent ruling handed down by the Supreme Court of New South Wales in Megalift v Terminals  NSWSC 324 cautions parties to exercise caution and diligence when negotiating a listing, as innocent conversation could turn into a contractually binding offer.
In the previous case, Terminals had used the services of Megalift. The latter match was asked to unload a huge storage sphere from a barge at the facilities of the first match. It was later discovered that the sphere could not be unloaded without excavating part of the terrain. This miscalculation or carelessness caused inconvenience, delay, and additional costs. Megalift, having provided an unexpected service, not initially quoted, claimed the additional amount. Terminals, on the other hand, claim excavation costs.
On April 28, 2006, Mega lift had sent a revised quote to Terminals. Subsequently, both parties entered into a contract on May 1, 2006. The Supreme Court was faced with the question of whether a contractual relationship existed before May 1, 2006.
The facts of this case are unique in that two agreements allegedly existed. Mega lift denied that its first letter dated March 21, 2006 was an offer capable of acceptance. According to his understanding of legally binding quotes and contracts, this was simply a “quote” or “budget offer”. Terminals treated this, as well as the purchase order, as a contract on April 4, 2006. Based on their understanding of legal obligations, they held Megalift liable for the breach of the first agreement.
So which agreement was legally binding? Judge Bergin ruled in favor of the former (April 4, 2006), where an offer was made and accepted. Both parties were already negotiating, discussing terms and details such as transportation and delivery. These talks involved quotes and, although a fixed price was not agreed, it was a legally binding contract. Furthermore, His Lordship ignored the appointment for the sole purpose of budgeting. This did not prevent the parties from contracting.
How did the short come to this conclusion? A contract requires an offer and an acceptance. However, are they price quote offers, and if they are, when do they become legally binding? Each case must be decided on the basis of the facts. This is a matter of objective intention of the parties involved. “We Quote You” has been deemed not to be an offer, but “it will be a pleasure to receive an order from you that will receive immediate attention” was considered an offer in a Canadian case. In the Canadian Association of Dyers v. Burton further stated that: “In each case of this type, it is a question to be determined based on the language used and, in light of the circumstances in which it is used, whether what the seller says is a mere quote from price or actually an offer to sell. “
The business context of such negotiations, as well as the circumstances in which quotes are discussed, are important considerations. One way to avoid being forced by a mere estimate is to ensure that the quote clearly indicates that it is not a binding offer. The next time you make a quote or accept one, just be sure to expressly convey your intention and desire to stick to the quote.