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Estimate Price Contracts
Require Advance Change Notice or Original Cost Estimate May Be Imposed
Must An Updated Estimate Be Provided or Can a Price Change Occur Without Notice or Warning?
Suppliers Usually Need to Charge At or Near the Estimated Price.
Understanding When Pricing May Change Within An Estimated Price Contract Depends Upon the Contract
When a supplier of services, such as a contractor, mechanic, mover, among others, provides an estimated price, the law requires that the eventual invoice will somewhat resemble the initial estimate. Unless unforeseeable circumstances arise, and a notice of change to the original estimate was provided, the customer is typically 'right' in a dispute over a substantial difference between the final price and the originally estimated price. Without properly letting the client know that the final price will be considerably higher than the estimate, the supplier may get stuck to charging the initially estimated price.
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The Law
Must An Updated Estimate Be Provided or Can a Price Change Occur Without Notice or Warning?
Generally, it appears that only business-to-consumer relations have pricing estimates protected and governed by statute. In Ontario, the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, provides that estimated pricing within a consumer agreement shall be within ten (10%) percent of the final pricing unless amendments were approved by the consumer and the supplier. Specifically, the Consumer Protection Act, 2002 states:
Estimates
10 (1) If a consumer agreement includes an estimate, the supplier shall not charge the consumer an amount that exceeds the estimate by more than 10 per cent.
Performance of consumer agreement
(2) If a supplier charges an amount that exceeds the estimate by more than 10 per cent, the consumer may require that the supplier provide the goods or services at the estimated price.
Subsequent agreement
(3) Nothing in this section prevents a consumer and a supplier from agreeing to amend the estimate or price in a consumer agreement, if the consumer requires additional or different goods or services.
For business-to-business matters, where a statute law addressing the issue of estimates fails to exist, the common law case of Go Island Hopper Helicopters Ltd. v. Rotech Industries Inc., 1996 CanLII 2448, appears to address the issue whereas it was said:
68 Further, in the event that there was only an estimate, I would apply the law enunciated by Wright J. in Kozik v. Melnick, [1991] O.J. No. 1259 (Ont. C.J.) which concerned a quantum meruit claim arising from the refurbishment of an aircraft. The court held at p. 5:
In approaching this matter I proceed on the assumption:
(1) That a man is entitled to fair compensation for effort expended.
(2) That an "estimate" is not a contract.
(3) That while an estimate may not constitute an enforceable agreement, the conduct of the claimant, viz.: (a) his failure to keep the customer advised of the necessity to increase the fees beyond the estimate, and (b) the failure to inform the customer that other charges would be charged separately may dictate that the original estimate be adhered to. See: Thomson, Rogers and Croyden Furniture Systems Inc. (1982), 16 A.C.W.S. (2d) 196.
(4) That where circumstances change the customer is entitled to be warned of the change. Re: Solicitor (May 10th, 1967).
(5) That where an honest misunderstanding arises over the extent of the work to be done for the amount stipulated the Court will lean against the party who might have taken steps to have avoided the misunderstanding.
Re: Phelan, O'Brien, Shannon, Lawer and Kozaroff (1981), 8 A.C.W.S. (2d) 494.
69 If this is an estimate case as opposed to a contract case, in my view the plaintiff was entitled to be warned of any change in the defendant's estimate.
Summary Comment
When a supplier provides an estimate to a consumer, the supplier will, generally, be held to issuing a final invoice that is within ten (10%) percent of the estimate. When a supplier provides an estimate to a business, the supplier will, generally, be held to issuing a final invoice that is within a reasonable range of the estimate. The law, generally, requires suppliers to provide notice of change for review and approval by the customer, whether the customer is a 'consumer' or a 'business', prior to allowing the final amount charged to vary significantly from the original estimate. However, even with this said, it may be that a strong argument that the legal principles of quantum meruit, being a fair value, should apply.
NOTE: A significant amount of queries such as “local lawyers” or “top attorney in” typically signify a pressing need for competent legal assistance instead of a particular job title. In Ontario, licensed paralegals fall under the regulation of the same Law Society that supervises lawyers, granting them the authority to assist clients in specified litigation issues. Their tasks revolve around advocacy, legal analysis, and procedural expertise, which are crucial to their function. Anderson Aylwin Begg & Co. provides legal representation within its licensed parameters, focusing on strategic positioning, evidence preparation, and compelling advocacy designed to secure effective and favourable outcomes for clients.
