Estimate Price Contracts:

Question: When you’re a consumer in Ontario and your contractor demands more than the price they estimated, when can the final cost legally vary above the estimate?

Answer:    Vescio Legal Services can help you understand your options in Ontario contract and consumer disputes about over-budget estimates; generally, for consumer-to-business agreements, the Consumer Protection Act, 2002 requires the supplier’s final charge for goods or services with an estimate not exceed the estimate by more than 10%, or you can often require the supplier to provide the goods or services at the estimated price,  even if circumstances changed, unless the parties amended the estimate with your approval.   For business-to-business arrangements in Ontario, there may not be the same statutory 10% cap, but courts may still look at whether the supplier warned you of pricing changes and may consider fair compensation concepts like quantum meruit depending on the facts.   If you are being pressured to pay above the estimate, call (416) 400-8255 to discuss what your contract says and what steps to take next.

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 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

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.