Estimate Price Contracts:

Question: When may pricing vary above an estimate for goods or services in Ontario?

Answer: 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?

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.

Note: Please contact Wennekers.Legal™ by phone at: (647) 701-1162 to discuss any specific questions that you may have.

The Law

My Contractor is Charging Higher Than I Was Quoted.  Is This 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

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.