Is A Quote A Contract: A Primer for Small Businesses

A 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 makes quotations legally binding under certain conditions. Each side must agree to give up something to form an enforceable bargain.

Key Takeaways 

• A quote in and of itself is not a legally binding contract.
• Accepting a quote or verbal contract may be considered a legally binding quotation if the vendor and seller both agree.
• Fraudulent contracts and contracts agreed upon under duress are not considered legally binding contracts in most cases.
• Both must agree upon the terms and confirmed jobs of each party, and often need to take further steps like signing the written contract to make it a legally enforceable contract. 
• Once a legally binding agreement is established, either party can raise a dispute and take the other to court if they do not follow through with their legal obligations as promised. 

In this article, we’ll cover the following:

Is a Quote a Contract?

Is a Quote a Legally Binding Contract?

Is Price a Legal Binding Contract?

Conclusion

Is a Quote a Contract?

A quote and a contract are similar but not the same. A quote is something a vendor sends to a client to outline the terms of service and how much they will charge for said service. The client then has the opportunity to agree or propose changes to the terms. 

A contract, on the other hand, is a legally binding agreement between both parties. A quote can become a contract if both the seller and the buyer agree.

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.

Here’s what needs to happen for a quote to turn into a contract:

1. Supplier submits the quote to the client

2. The client accepts the quote and issues an order

3. 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.

The client can request that the supplier put their acceptance (see step three) in writing. Or, the supplier can accept by delivering the products ordered or starting work on the project.

If the supplier fulfills the quote but the quote is never formally accepted by the client, no binding contract exists and the supplier may not get paid.

A client can also accept a quote but still change or cancel the order anytime before the supplier accepts the order.

• 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.

It’s not always easy to estimate the time, labor, and materials that will go into a program when you are creating a quote, but with estimating software like FreshBooks, creating and sending written estimates is much simpler. Click here to sign up for a free software trial today.

Is a Quote a Legally Binding Contract?

No, a quote by itself is not a binding contract. It is a document that outlines your terms of service and how much you would charge were those terms accepted. 

In a court of law, only bargains that are agreed upon by both parties are considered legally binding quotations. Therefore, once the customer accepts the quote, it may become legally binding. To prevent any legal consequences, it’s essential to create a precise quote. Our article on how to write a quotation provides a step-by-step walkthrough to help you make an accurate quote.

Is Price a Legal Binding Contract?

No, a price quote is not legally binding because it is not a promise between two parties. Price quotes are given as a gesture of good faith to help the client make an informed business decision but they are not a legal contract.

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.

Conclusion

Understanding the difference between a written quote and a contract is extremely important when you are running a business. Writing a quote for a client is as simple as outlining your terms, and quoting them a cost for the completed project, whereas a legally binding offer is a covenant both parties are willing to agree upon.

You want to ensure you are under no legal obligation to perform work or make payments that you did not wish to agree to. Always review your paperwork carefully before signing anything, and if you do not understand something, seek clarification before signing. Once the contract is established, either party can take the other to court if they do not follow through on their end of the agreement.

People also ask:

• Is Accepting a Quote a Contract?
• Is a Verbal Quote Legally Binding?
• Can you pull out an accepted quote?
• Can you change your mind after accepting a quote?
• Are estimates legally binding?

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 business agrees to provide the services outlined. Each side has to agree to their part.

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.

Can you pull out an accepted quote?

If the quote is part of a legal contract, neither party can pull out of it without formally rewriting the contract together, with both ends agreeing to the changes. 

If the contract has formal acceptance by the buyer but the seller has not yet formally agreed to the terms, they may still withdraw their offer, and the client still has time to change their mind. Neither of them are legally bound until the formal quote is agreed upon by both parties. 

Can you change your mind after accepting a quote?

You may have a small window of time to change your mind after accepting a quote from a vendor. A contract is not legal until both parties have agreed upon the terms officially, so if that has not occurred yet, you may be able to decline the quote.

If the client and the vendor have both agreed, changing your mind is considered a breach of contract, and legal action may be taken against you.

Are estimates legally binding?

No, estimates are not legally binding. They are a rough educated guess on how much a project will cost, and the end price could end up being higher or lower than the original estimated amount.

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