# Regulatory Compliance Category > Consumer Protection Act Forum > [Question] What does the CPA say about quotes, written and verbal?

## Danielle MM

Can anyone tell me what my rights are in terms of a supplier sticking to a quote they gave me? I spoke to a salesperson in the supplier's office about purchasing software from them, and the brochure indicates that you can have 1-20 users on this specific package which is ideal for our environment as we have six staff who need to access this program. We were quoted for the program and an additional module that we needed to add onto it, but when we wanted to place the order we were informed that there will be an additional charge of R1 600 PER USER which pushes the cost of the product up quite considerably. The supplier is willing to only give us one user for free because of the 'miss-communication', but the cost on our part (for their mistake) is still bigger than we can afford to carry. Is there anything I can do? :Mad:

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## Justloadit

A quote is not a firm contract, so there is no legal binding, until the quote is accepted by the issuer, it is simply an indication of what it may cost. In fact most quotes have a provision which generally says something about errors and omissions allow the quote to change. 

Had they accepted the order, and then came back to say the price was incorrect, then you could implement the CPA regulations.

I stand to be corrected here, but I am not aware of any law which says that a supplier has to accept a quote as binding, unless there is a contract signed at the time of the issuing of the quote, and on the acceptance of the quote by the client.

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Danielle MM (27-Mar-13), pmbguy (05-Apr-13)

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## Dave A

:Hmmm: 

The CPA is pretty strong on misleading advertising. What concerns me is when it comes to multi-user software, typically a "1-20 users" type of statement in advertising material is referring to the capacity limitations of the software rather than the number of user licences you're getting for a single purchase.

Multi-user bundled offers tend to be pretty specific e.g. "5 user licence bundle for Rx.00"

I suggest you re-read the brochure with this in mind. If in doubt, any chance you could post a scan of that brochure you're referring to?

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Danielle MM (27-Mar-13)

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## Danielle MM

Thank you very much for the advice.. I have spoken to Pastel and told them that the information I was given is incorrect, and they have agreed to at least give us a discount on the pricing. We will still be paying more than the quoted amount, but I guess that if the quote is not seen as a legally binding document the discount is a nice gesture.

Enjoy your day!

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## AndyD

It would be interesting to see whether a quote itself could be classed as a form of advertising or direct marketing under the CPA, it is part of the sales process upon which a customer bases their purchasing decision.

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Danielle MM (28-Mar-13)

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## Mike C

> Thank you very much for the advice.. I have spoken to Pastel and told them that the information I was given is incorrect, and they have agreed to at least give us a discount on the pricing. We will still be paying more than the quoted amount, but I guess that if the quote is not seen as a legally binding document the discount is a nice gesture.


It might be helpful for you to also request, at this time, what the annual fees will be - as this might also come as an unwelcome surprise to you.

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Danielle MM (28-Mar-13)

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## adrianh

But what happens when you take a car in for repairs and you get a quote, say R 500 to repair the brakes. The workshop then charges you R5,000 when they are done and claim that a quote is not legally binding? I've never signed a quote for anything, I've always accepted that that is the price to be paid unless the company quoting specified that the price may vary for a specific reason i.e. having to buy in parts.

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Danielle MM (28-Mar-13)

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## Justloadit

True Adrian, but the workshop accepted that you accepted your quote. If the workshop had quoted R500.00, and you OK I accept the quote, and the workshop as yet has not accepted your quote, the fact that you accepted the quote is still not binding until the acknowledgement from the workshop. Now the workshop comes back to you and say, hang on a second we have found some unforeseen damage here, and since we have not accepted the quote, it has now been revised to R800.00. The client at this time can reject the quote and go fetch his car.

This situation happens every day especially on accident damaged vehicles.  A panel beater gives a quote, it is accepted by the client, but when they start stripping, more damaged becomes evident, and at this time he then requests a change in the quote to accommodate the discovered damage, it is usually known as "extras"

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Danielle MM (28-Mar-13)

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## sterne.law@gmail.com

The quote and unforseen damages may, depending be two different beasts.
Irrespective, any extra cost must be communicated to customer, who must give permission to go ahead. Whether that cost should have been part of the original cost is a seperate issue. Example, i quote to paint your house, I dont include undercoat in costing,  is different to if whilst preparing the wall I notice dampnss that needs to be fixed.
Once I accept a quote then the contract comes into being. Such acceptance need not be in writing.
Although the CPA is not applicable to a business, the normal laws of cobtract apply. If you perform work without an instruction then there is no contract in place.

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adrianh (28-Mar-13), Danielle MM (28-Mar-13)

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## Justloadit

Dear Anthony,

A question, if I issue a quote, will it only be binding if I acknowledge reception of the order from the client based on the contents of the said quote. In other words, if I feel that the quote has errors, can I reject the acknowledgement of the acceptance of the customer order on the said quote?

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## adrianh

@sterne.law@gmail.com - that's the way I understood it, thanks.

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## Dave A

I suggest one should distinguish between a quote and an estimate.

A quote is a firm offer - all that is required is for the consumer to accept the offer before the expiration of the quote to form the contract.

An estimate leaves a little more wriggle room - but take care that the cause and nature of any potential variances is disclosed in the estimate.

On errors - the supplier is on the hook if the consumer accepts an offer made in error. If the supplier makes an error in their offer, they must correct the error before the consumer accepts the offer. (I had a little chuckle at a fairly recent incident of this sort - Makro had made an error in one of their email promos - the correction notice came out about an hour later).

Ommissions are problematic in that if they are deemed deliberately misleading, again the supplier is likely to be in the firing line.

Most important of all - do not make *any* supply without a clear and reasonably provable indication of acceptance from the consumer of your estimate or quote.

It is probably also worth pointing out that lawful position and enforcing lawful position are two different things, particularly when the sum involved is fairly trivial.

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## Justloadit

What about the "Errors & omissions excluded" clause?

I would then suggest to add a further clause to the quote.

"The terms of this quote are subject to the issuer of this quote's formal acceptance of the quote in writing."

or words to that effect.

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## Dave A

Section 23.6 of the CPA:




> Subject to subsections (7) to (10), a supplier must not require a consumer to pay a price for any goods or services
> 
> a) higher than the displayed price for those goods or services; or
> 
> b) if more than one price is concurrently displayed, higher than the lower or lowest of the prices so displayed


On errors - section 26.9 of the CPA:




> If a price as displayed contains an inadvertent and obvious error, the supplier is not bound by it after
> 
> a)correcting the error in the displayed price; and
> 
> b)taking reasonable steps in the circumstances to inform consumers to whom the erroneous price may have been displayed of the error and the correct price.


For folks in the service industry, you also want to pay close attention to section 15.

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## Justloadit

Hi Dave,

The sections you quoted really refer to a retail store, and not so much to a written quote. A simple clause such as "while stocks last" would mean that there is a sufficiently open door to accept the order or not. Sorry client, I no longer have that stock at that price.

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## adrianh

@Justloadit - why are you not willing to stand by your quote?

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## Justloadit

Hi Adrian,

Not saying I am willing to stand by my quote. If you make a genuine mistake, you are now taken to the cleaners.

I had a recent experience in which I made an error in my quote, I only counted for 2 pins at R5 each on a job which actually had 12 pins in total. It seems insignificant, but the error was more than my profit, and having been over 70 systems supplied it hurt. I kept to my quote, simply because it is a regular customer, and purchases a huge amount from me on a monthly basis, however if it was a customer which I only see once in my lifetime, I feel that the loss would not be worthwhile, and I probably would have rejected the acceptance of the order.

That is all I am saying, as a supplier I would like to still be in control of my business, and have the final say if I wish to accept the order or not.

Ifwe are referring to a multimillion Rand tender, and acceptance means the business is bankrupt if it continues with the order, surely if the tender is accepted as the supplier you still have the right to refusal of the order, surely they can award it to the next tenderer.

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## adrianh

But at what point do you stand by your word. Is the point of preparing the quote not to ascertain exactly what it would entail to complete a task. You should be certain of your facts when you hand the quote to the customer.

The point that I am making is that you are trying to add a step to the process to double check yourself, if you did what you were supposed to correctly in the first place then the step won't be necessary. What happens if you still get it wrong the second time round, will you add a third chance?

Look, I am also in business and I also get it wrong, sometimes I bite the bullet and sometimes I try to get the customer to agree to a compromise. The best one can do is to be more careful next time but I certainly don't want to say to my customer that I am unwilling to stand by my quote because I am unsure of myself.

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## Justloadit

It's not about double checking myself, sh!t happens, and if continuation of the task becomes detrimental to the business, then the decision is about ensuring that you are available to your other loyal customers.

In my business, I have to create a new product from scratch, no past repeats, and then calculate the cost for mass production from an unfinished item, and this all is usually from the first take when not even a prototype has been done, with the emphasis of competing with the east. So it becomes  extremely challenging. 

Now a situation arises that we do not get every quote we do, so it requires intense concentration for a return of maybe 1 in every 10 quotes, there is bound to have errors that creep up, which arises due to the amount of information that has to be collated, each item used, which can arise to over 150 individual parts from a number of different suppliers.

Once a quote is accepted, I then do a thorough check of my initial quote. I have found that in the majority of cases I have done everything correctly, and on a small number of cases I made an error, and out of that on a rare occasion I reject the quote.

I feel as a supplier that I also have a right to accept an order or not, and this is what I am on about.

As a supplier even if my price has been quoted correctly I feel that I have a right to supply a customer or not, and this is what I feel is what I am trying to bring up in my discussion. The fact that a customer is happy with my price and accepts it, does not mean that I have now supply the goods or services, however if I have already supplied goods, and try to change the cost there off, then I feel the customer has a right to fight for the original price quoted .

There are customers who I will not supply my goods even at a higher price, simply because they are not capable of using my goods, and are constantly demanding free training or warranties, which are not due to manufacturing , but rather due to ignorance or misuse of the equipment. At this time it is cheaper to reject the sale.

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## adrianh

I still disagree with you. You are simply trying to protect yourself from yourself at the customers expense. You want to add a layer that shouldn't be there. You commit to your word when you present the quote,thats just the way that it is. 

Its like getting engaged, if you are unsure about your intention or ability to stand by the commitment then you shouldnt commit, you should delay until you are ready or you should pass.

Another analogy is to point a firearm at somebody, you have to be willing to follow through and shoot the guy otherwise you shouldn't point the firearm at him.

All the above examples are the same in that there comes a commonly accepted time when there is no turning back. You are trying to change the rules to protect yourself from yourself.

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## Justloadit

Hi Adrian,

It's your right to disagree, just as it is my right to not accept your order  :Smile: 

What I am saying is that once I accept your order, I keep to my word, up till then I have the choice to accept your order or not, as far as I am concerned a quotation is an intention to commit if you accept the quote based on information available at the time, up till then if circumstances change which may affect the initial terms and conditions of the quote, then I feel that I have the right to change the quote as well, just as you have the right to accept the revised quote or not.

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## adrianh

The problem is that your view goes against generally accepted norms. I suppose you could get away with it if you make it clear on your quote that that is the way that you operate.

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## Dave A

> Hi Dave,
> 
> The sections you quoted really refer to a retail store, and not so much to a written quote.


The trouble is there are bits and pieces relating to pricing and authorisation issues all over the CPA, but I believe this is the most appropriate section to consider when it comes to quotes.

However, I think where you and I (together with Adrian by the looks of things) are actually getting crossed up is you keep referring to a "quote" rather than an "estimate".

Forget the CPA for a moment - what words you use are important beyond just the CPA. Here's something that was drilled into me at a very early stage in my business career:
There is a material difference between a "quote" (or quotation) and an "estimate", just as there is a material difference between a "guarantee" and a "warranty".

A quote is a firm offer - so you better make sure you've dotted all the i's and crossed all the t's.
An estimate inherently implies the potential for variances between the original estimate and the final charge raised.

If you were talking about an *estimate* and suggesting this was subject to final acceptance, I wouldn't be nearly as concerned. You may have not had a problem in your situation so far (which I gather relates to manufacturing), but I'm really concerned that someone else accepts your position and ends up paying the price as a result.

If you're not willing to be held to the precise letter of your offer, make sure you give an *estimate*, not a quote.

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Blurock (02-Apr-13), Justloadit (03-Apr-13)

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## sterne.law@gmail.com

As Dave raise, a quote an an estimate are seperate issues.
A quote is an offer, which if accepted, becomes a contract, albeit pre CPA or post.
As Justloadit says,  many people  have their own operating procedures, which  in the end determines their rise or fall, the key here is the legal standpoint. 
There are many things we dont agree with, take having to join the bargaining council, but the legal position is the legal position. This is such a case.
Reading the post again,  "your right to disagree just as is my choice to accept" ....But once I ACCEPT I keep my word is the offer and acceptance paradigm. Again, there is a big difference between merely increasing the price, and "revising" a quote because there is additional work, this brings a new contract into play. I call you and offer to perform the extra work for X, and you either accept or decline.

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Justloadit (03-Apr-13)

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