Is a Quote a Binding Contract? A Primer for Small BusinessesA quote is not a binding contract. Under contract law, only offers are considered legally binding and a quote is not an offer. That said, accepting a quote can create a legally binding bargain under certain conditions. Each side must agree to give up something to form an enforceable bargain, according to USA Today. In this article, we’ll cover:
Is a Quote a Contract?A quote (or quotation) is not a binding contract. Contract law says that a quote is not considered an offer and only acceptance of offers makes for a legally binding contract, according to Cornell Law School. Here’s what needs to happen for a quote to turn into a contract:
- Supplier submits the quote to the client
- The client accepts the quote and issues an order
- The supplier accepts the order
- For example, a wedding photographer emails a written quote to a client for $2500 for 10 hours of photography. The client emails back saying they accept the quote and want to proceed with the order. The wedding photographer emails the client again to thank them and confirm that they will do 10 hours of work on a certain date for $2500. A legally enforceable contract has now been established.
- For example, a builder sends a quote to a homeowner for a project to remodel their bathroom. The homeowner can then decline the quote and the builder can withdraw his offer. Neither are legally bound to provide or accept the services included in the quote.
Is a Price Quote Legally Binding?A price quote (also known as simply a “quote”) is not legally binding. A legal contract exists when two parties make promises to each other, according to the Houston Chronicle. A quote is not a promise by a supplier to deliver goods or services and it’s definitely not a promise by a client to pay for these goods or services. So, a price quote cannot be legally binding. That said, a legal contract does begin with an offer by a supplier to provide certain products or services via a quote. The client can then accept or reject the offer or ask for changes to the offer (a “counteroffer”). A rejection or counteroffer doesn’t mean acceptance of the offer so a contract isn’t formed yet. And if either side is forced into acceptance thanks to fraud or any kind of coercion, the contract isn’t legally binding either. Let’s say both parties agree to the quote willingly. A state may require further actions for a legally enforceable contract to be formed. For example, a state might require that both sides sign a written contract. Once a legally binding contract is established, either party can take the other to court if one side doesn’t follow through i.e. the client doesn’t pay or the supplier doesn’t perform the services outlined in the quote. A written contract can make this easier as each party’s rights should be clearly detailed. People also ask:
Is Accepting a Quote a Contract?A client accepting a quote does not make the quote a contract. A contract is formed when the client accepts the quote and the small businesses agrees to provide the services outlined. Each side has to agree to their part.
- For example, a general contractor prepares a quote to install new cabinets in a homeowner’s kitchen. The general contractor needs to state an offer, such as: “I will install 10 cabinets for $25,000.” The homeowner then needs to accept the offer, such as: “I will pay you $25,000 to install 10 cabinets.”
Is a Verbal Quote Legally Binding?A verbal contract is just as legally binding as a written contract. That said, a quote is not a contract and merely delivering a verbal quote doesn’t make it enforceable. For a verbal quote to become legally enforceable, there has to be a clear bargain made after the quote is delivered to the client, according to USA Today. Three things need to happen to establish a legally binding contract: the supplier has to make an offer, the potential client has to accept it and each side has to agree to give up something.
- For example, a graphic designer tells his client over the phone: “I would like to design a logo for you for $500.” The client responds, “I agree to pay you $500 for the logo.” This makes a bargain as the client is contributing money and the designer is designing the logo. This bargain is a contract and is legally enforceable.
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