What Happens If the Final Price On An Invoice is Much Higher Than Estimated?

Original Estimates May Be Imposed As Final Pricing Unless a Notice of Change Was Provided.

A Helpful Guide For How to Determine When Pricing May Change Within An Estimated Price Contract

Estimated Price Contract Document 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.

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.

Summary Comment

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.

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