Estimate Price Contracts:

Question: When can a supplier legally charge more than the estimate or quote in Ontario consumer and business deals?

Answer: In Ontario, if a consumer agreement includes an estimate, the Consumer Protection Act, 2002 generally requires the final amount to be no more than 10% above the estimate unless you approved changes to the scope or goods and services; for business-to-business estimates, the protection is less clearly statutory, but courts may still expect a supplier to warn you about pricing changes, and failing that can affect whether the original estimate should be followed or pricing adjusted on a fair value basis such as quantum meruit.   If you’re dealing with a final invoice that’s higher than the estimate, a Paralegal at Freed Legal Services can review your contract or estimate terms and explain your options across Ontario, including ways to push for the estimated price where applicable, so contact (800) 716-1897 to discuss your situation.

When May Pricing Vary Above the Estimate?

The law typically requires that an estimate will be in the ballpark of the final bill. The law also appreciates that the world of business and commerce requires pricing flexibility within contractual relationships whereas often circumstances arise where a final price is impossible to predict.  However, it almost goes without saying or suggesting that where an agreement is based only on an estimated price, the final price will be held as completely arbitrary and at whim of the supplier.  On the contrary, the law imposes certain boundaries; however, it is important to note that the boundaries may vary depending upon the nature of the relationship; whereas, for consumer-to-business relations, certain restrictions regarding estimated pricing will be applicable per the statutory law.  For business-to-business relations, certain restrictions regarding estimated pricing may apply per the common law.

The Law

My Contractor is Charging More Than What Was Estimated.  Is That legal?

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:

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:

Conclusion

Generally, when a consumer receives an estimate from a supplier, the consumer may reasonably rely upon the pricing within the estimate whereas the supplier is statutorily held to rendering an invoice with final pricing within ten (10%) percent of the estimate.  Similarly, for estimates in business-to-business relations, rather than business-to-consumer relations, the supplier will, generally, be held to rendering an invoice with final pricing 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.