Estimate Price Contracts:

Question: If I’m quoted an estimated price in Ontario, when can a supplier legally raise the final bill above the estimate?

Answer: In Ontario, the Consumer Protection Act, 2002 limits how much a supplier can exceed a written estimate in a consumer agreement, so the final price generally cannot be more than 10% above the estimate without consumer-approved amendments, and if it is over by more than that, the consumer may require the supplier to provide the goods or services at the estimated price, Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A, s. 10.    For business-to-business work, there may not be the same statutory cap, but common-law notice principles can still require warning of a material change, and courts may look at whether the “estimate” functioned like non-binding information versus an enforceable contract, including in Go Island Hopper Helicopters Ltd. v. Rotech Industries Inc., 1996 CanLII 2448.    If the invoice has jumped well beyond the estimate or you were not warned or asked to approve the increase, Empowered Legal Services can review your contract, scope, and billing communications with a professional legal advocacy team for Ontario consumers and help map next steps, call (855) 808-6510.

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When May Pricing Vary Above the Estimate?

When a supplier of services, such as a contractor, mechanic, mover, among others, provides an estimated price, the law requires that the eventual invoice will somewhat resemble the initial estimate. Unless unforeseeable circumstances arise, and a notice of change to the original estimate was provided, the customer is typically 'right' in a dispute over a substantial difference between the final price and the originally estimated price. Without properly letting the client know that the final price will be considerably higher than the estimate, the supplier may get stuck to charging the initially estimated price.

Note: Please contact Empowered Legal Services by phone at: (855) 808-6510 to discuss any specific questions that you may have.

The Law

Is An Estimate a Legally Binding Price?

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

When a supplier provides an estimate to a consumer, the supplier will, generally, be held to issuing a final invoice that is within ten (10%) percent of the estimate.  When a supplier provides an estimate to a business, the supplier will, generally, be held to issuing a final invoice that is 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.