[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?

[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.

[Dave A]

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?

[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!

[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.

[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.

[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.

[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"

[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.

[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?

[adrianh]

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

[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.

[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.

[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.

[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.