Don’t Be Left Guessing on Your Estimates

The Alberta Court of Justice reaffirms basic contractual principles when analyzing estimates in Medusa Contracting Inc. v Efficient Quality Homes Inc., 2023 ABCJ 123 (“Medusa Contracting”).

Developers and homeowners are often provided estimates that may turn into the contractual basis for the work being undertaken on a project. However, when multiple estimates are provided, questions may arise as to which estimate will ultimately be relied upon.

BACKGROUND

Medusa Contracting Inc. (the “Plaintiff’) was hired to complete the framing of a new home. The Plaintiff provided an estimate to Efficient Quality Homes Inc. (the “Defendant”) on September 25, 2021, and quoted a price of $26,793.90 for the work (the “first estimate”). The following week, the Plaintiff presented another document: an estimate of $20,500 (the “second estimate”).

The Plaintiff’s position was that the second estimate was created as an incentive, and not a new offer to replace the first. Rather, it was to show that he was prepared to charge 20% less for his framing services if guaranteed work on the Defendant’s future projects.

The Defendant, in disagreement, felt the second estimate more accurately represented the costs of framing the project, and that it therefore reflected the correct price and should form the base of their contract.

DECISION

In determining which estimate applied, the Justice referred to Powder Mountain Resorts Ltd. v British Columbia, a 1999 British Columbia decision (“Powder Mountain”). In Powder Mountain, the Court found that what is sometimes conceived of as an offer is nothing more than an invitation to negotiate. The Court held that the intention of the parties was not to enter into a contract, but rather to initiate negotiations which, if mutually satisfactory, would lead to a contract.

In Medusa Contracting, the second estimate was associated with a mere suggestion that the Plaintiff would be guaranteed work on future projects. Nothing further developed between the parties in regard to that suggestion. As a result, the Justice held that the second estimate was merely a starting point for the parties to negotiate, and the first estimate was accepted as the contract.

TAKEAWAYS

Medusa Contracting confirms that, in situations where multiple estimates are present, Courts will consider the intentions of the parties when deciding which estimate resulted in a contract. The most recent estimate, for example, is not necessarily the one that will become the contract.

Owners and contractors should clearly communicate their intentions in order to ensure that there is no ambiguity as to what has been agreed to.

For any questions you may have about the binding nature of your estimate, please contact any member of our Construction Law team.