Area of Law: Construction Law
Answer # 1981
What are quotes, estimates, bids and tenders?Region: Ontario Answer # 1981
While the words “quote”, “estimate”, “bid” and “tender” may be used interchangeably by some, there are distinct legal definitions for each word that can have a direct impact on a dispute between a contractor and client.
Using the wrong phrase in a contract or negotiations can result in a price no longer being considered fixed or a legally binding offer.
An “estimate” is simply a guess as to what the project will cost. The end price could be less or, likely, more.
A “quotation” or quote, on the other hand, is a legally binding fixed price for a fixed amount of work. The two phrases should not be used loosely.
A “tender” is a formal legal document prepared by a client setting out the specifics of a potential project and requesting “bids” or proposals from one or more contractors
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