Last Updated: , 71 days ago.
When may pricing vary above an estimate for goods or services in Ontario?
Wennekers.Legal™ can help you understand when an invoice can legally exceed an estimate and what to ask for if the final price jumps; In Ontario consumer agreements, the Consumer Protection Act, 2002 generally limits over-charging to no more than 10% above the estimate (unless you approve an amended estimate), and if it exceeds that threshold you may require the supplier to provide the goods or services at the estimated price; for business-to-business arrangements, there is usually no same statutory 10% rule, but courts may treat an estimate as requiring warnings about scope or pricing changes, and arguments like “fair value” or quantum meruit may apply; if you want to assess your contract and protect your rights, call (647) 701-1162 for professional legal services.
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When May Pricing Vary Above the Estimate?
Without advance notice, the law usually expects that the amount eventually charged on a final invoice must be within some closeness to the initial quote or estimate. With this said, generally, the law also understands and allows for reasonable variances arising from changes that come about due to something unforeseen when the initial quote or estimate was provided. This reasonable flexibility enables business to avoid needing to confirm approval for every extra penny; however, the law does, again generally, allow a final price to somewhat exceed the original estimate.
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The Law
What Happens If the Final Price On An Invoice is Much Higher Than Estimated?
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.
Conclusion
Unless the customer makes changes to the scope of project or object purchase, a supplier to a consumer will quite likely be held to a final price that is within ten (10%) percent of the estimated price. For a customer in a business-to-business matter, the protection is informal and appears imposed merely by the common law without statutory mandate; however the Go Island Hopper case suggests that without a warning of pricing change from the supplier, the supplier may be held to, or close to, the original estimated price. With this said, there may still be room to argue that pricing should be based on a fair value for the work done, or what is known in law as quantum meruit, so to avoid an unjust enrichment.
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