§ 2.5 Quotation of Prices; Estimates

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A quotation of prices is not an offer, for a mere quotation of price leaves unexpressed many terms that are necessary to the making of a contract. A quotation is usually a price per unit of quantity, as when corporate stock is quoted at $85 per share, hogs at $62.50 per hundred pounds, cotton at 72 cents per pound, or oil at $30 per barrel. Such a quotation leaves unstated the amount to be sold, the time and place of delivery, the terms of payment, and other matters usually agreed upon before closing a deal. As will appear below, the use of the word ''quote'' does not in itself prove that these other terms have not been already agreed upon, tacitly or otherwise,n1 but one who asserts a contract must show that they have been so agreed upon.

A quotation of price, standing alone, is not an offer.n2 If it does not stand alone, it may be an offer.n3 The absence of a quantity term or other description of the subject matter will almost always indicate that no offer has been made.n4 If the quotation comes in reply to a request for an offer and expressly or impliedly contains detailed terms, it may well be deemed an offer.n5 Of course, if it contains language of commitment and detailed terms, it is an offer.n6 If it comes after prolonged negotiations and contains detailed terms, it is likely to be an offer even absent language of commitment.n7 If it is made by a sub-contractor or supplier to a general contractor, it should be deemed an offer,n8 at least in the absence of countervailing indications.n9 On the other hand, a detailed proposal made to a buyer on a seller's form describing itself as an offer is no offer where it was subject to acceptance at seller's home office.n10 It is noteworthy that, while the earlier cases are mainly concerned with whether or not a contract exists, most of the more recent cases involve a conceded contract and are concerned with the question of locating the moment of contract formation to determine, in a battle of forms, what the operative terms of the contract are. To do this, it is often essential that the offer be identified.n11

An estimate is neither an offer nor a quotation. The difference may be shown by illustration. Assume an architect is asked to quote a price for a job and answers ''$2,500'' and the person who made the inquiry responds, ''please do it as soon as possible.'' This response is an offer to pay for the job at the quoted price. If the architect then replies, ''I'll do it,'' a contract is then formed at the price of $2,500. Assume instead that the architect had answered the inquiry by stating ''I estimate it will cost $2,500,'' the ensuing contract, if formed in the manner hypothesized above, would have no price term and the architect would be entitled to the reasonable value of the work performed even if in excess of the estimated price.n12 An estimate generally implies approximation, rather than commitment to an amount. Nonetheless, just as the use of words such as ''offer'' and ''quote'' are not conclusive of the legal effect of a communication, the word ''estimate,'' can, in context, be used in the sense of ''offer.''n13 Certain consumer protection regulations govern the ability of merchants and other experts to depart from estimates in consumer transactions.n14 At least one non-consumer case has held that where there has been reliance on an estimate the estimator is estopped from charging more.n15 The soundness of the case depends on whether reliance was justified. The estimate involved the then relatively arcane subject of lighterage and stevedoring costs on the Arctic Coast of Alaska. Inasmuch as the estimator claimed special knowledge and the estimate partly induced a contract for the sale of mobile housing, the decision appears justified.

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For related research and practice materials, see the following legal topics:

Contracts LawFormationExecutionContracts LawSales of GoodsForm, Formation & ReadjustmentFormationOffer & AcceptanceContracts LawFormationOffersGeneral Overview

FOOTNOTES:

(n1)Footnote 1. In the following cases the words used constituted an offer:

Cal. - Gibson v. De La Salle Institute, 66 Cal.App.2d 609, 152 P.2d 774 (1944) .

Ky. - Fairmount Glass Works v. Grunden-Martin Woodenware Co., 106 Ky. 659, 51 S.W. 196 (1899) , ''We quote you Mason jars ... pints $4.50 per gross, for immediate acceptance''.

Md. - Maryland Supreme Corp. v. Blake Co., 279 Md. 531, 369 A.2d 1017 (1977) .

Tex. - Wolert v. Arledge, 4 Tex.Civ.App. 692, 23 S.W. 1052 (1893) .

Va. - J.B. Moore Electr. Contractor, Inc. v. Westinghouse Supply Co., 221 Va. 745, 273 S.E.2d 553 (1981) . The seller prepared a purchase order on its form and submitted it to buyer who signed and returned it. It was held that the contract was made when the buyer returned the purchase order. The absence of a signature line for the seller indicated that the buyer's assent would conclude the contract.

Wis. - Lawrence v. Milwaukee, L.S. & W.R. Co., 84 Wis. 427, 54 N.W. 797 (1893) . In Nickel v. Theresa Farmers Co-op. Ass'n, 247 Wis. 412, 20 N.W.2d 117 (1945) , the court said that price quotes on the back of a business card constituted an offer. This is doubtful, but the price quotes coupled with statements of quantity, part performance and further conversations about price and quantity made a contract, although it is possibly not feasible to identify the moment at which mutual assent existed. See § 1.12 above.

In Dalrymple v. Scott, 19 Ont.App. 477 (1892), the plaintiff wired, ''Quote for May shipment 90% patent straights and low grade flours, stating quantity can offer. Reply quick.'' The defendant replied by letter, ''We will ship you 500 bbl. pat. at 4.25 F.O.B. here May shipment. We have no straight grade to offer at present. We can supply you with 300 bags low grade at 1.25 per 98 lbs sacks included, May delivery. If these figures meet with your approval we would be pleased to open up business with you.'' Plaintiff replied by wire: ''Letter received; offer accepted; writing.'' It was held that there was a contract, but that demand and shipping instructions by plaintiff were conditions precedent that were not fulfilled.

In R. E. Crummer & Co. v. Nuveen, 147 F.2d 3, 157 A.L.R. 739 (7th Cir.1945) , a published notice that funds had been provided for the purchase of bonds at par and that bonds might be sent to the M. Trust Co. for surrender was interpreted as an offer to buy at par all bonds submitted, and not as a mere quotation of a price. At least, there was sufficient basis for inference to make a summary dismissal erroneous.

(n2)Footnote 2. Nebraska Seed Co. v. Harsh, 98 Neb. 89, 152 N.W. 310 (1915) , may be regarded as a close case. Harsh wrote a letter to the Seed Co., saying, ''I have about 1,800 bu. or thereabouts of millet seed of which I am mailing you a sample. This millet is recleaned and was grown on sod and is good seed. I want $2.25 per cwt. for this seed f.o.b. Lowell.'' This was held not to be an offer. The court said: ''In our opinion the letter of defendant cannot be fairly construed into an offer to sell to the plaintiff. After describing the seed, the writer says, ''I want $2.25 per cwt. for this seed f.o.b. Lowell.'' He does not say ''I offer to sell to you.'' The language used is general, and such as may be used in an advertisement or circular addressed generally to those engaged in the seed business, and is not an offer by which he may be bound, if accepted, by any or all of the persons addressed.''

''If a proposal is nothing more than an invitation to the person to whom it is made to make an offer to the proposer, it is not such an offer as can be turned into an agreement by acceptance. Proposals of this kind, although made to definite persons and not to the public generally, are merely invitations to trade; they go no further than what occurs when one asks another what he will give or take for certain goods. Such inquiries may lead to bargains, but do not make them.'' The court intimates that similar letters had been sent to other potential buyers. Compare McKenzie v. Hiscock, 55 D.L.R.2d 155 (Sask.App.1965). ''The price I am asking for the [described farmland] is $13,500... The price is good until November 30th 1961,'' signed by both parties was an offer. The context was different from that of Nebraska Seed.

In Owen v. Tunison, 131 Me. 42, 158 A. 926 (1932) , the plaintiff wrote asking the defendant if he would sell a store for $6,000. The defendant replied, ''It would not be possible for me to sell it unless I was to receive $16,000 cash.'' In spite of an immediate acceptance, it was held that there was no contract.

In Ahearn v. Ayres, 38 Mich. 692 (1878) , Ahearn sued defendants for not accepting certain stave bolts. He had asked one of the firms what they were paying for bolts, and was answered they would take all he could make and deliver at $2 per cord. He afterwards made a lot of bolts, which he proposed to furnish, but they denied any bargain. There was held to be no contract. ''Ahearn did not inform defendants that he would accept or act on their order, or deliver any bolts, or, if any, how many. The transaction went no further than what occurs when any one asks another what he will either give or take for commodities. Such inquiries may lead to bargains, but do not make them.''

In Johnson Bros. v. Rogers Bros., 30 O.R. 150 (1899), defendants, dealers in flour, wrote to plaintiffs, who were bakers, ''We quote you, F.O.B. your station, Hungarian $5.40 and strong Bakers $5.00 car lots only, and subject to sight drafts with bills of lading.'' Plaintiffs immediately telegraphed, ''We will take 2 cars Hungarian at your offer of yesterday.'' Defendants telegraphed back the same day, ''Will accept advance of thirty on yesterday's quotations.'' There was no contract. The word ''quote'' was defined as ''to give the current or market price of.''

In Harvey v. Facey, (1893) App.Cas. 552, the plaintiff telegraphed: ''Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid.'' The defendant replied: ''Lowest price for Bumper Hall Pen Ј900.'' The plaintiff then telegraphed: ''We agree to buy Hall Pen for the sum of Ј900 asked by you.'' It was held there was no contract. Many have disagreed with the interpretation given to these expressions by the court.

In Sellers v. Warren, 116 Me. 350, 102 A. 40 (1917) , A offered to buy B's interest in certain land for four-elevenths of the total selling price B replied: ''Cannot accept offer; would not consider less than half.'' A telegraphed: ''Accept your offer of equal division.'' There was no contract made.

The following cases also held that there was no offer creating any power of acceptance:

U.S.; Md.- Hall v. Kimbark, 11 Fed.Cas. 234 (E.D.Mo.1900) . In Thos. J. Sheehan Co. v. Crane Co., 418 F.2d 642 (8th Cir.1969) , a price list accompanied by a promise of ''price protection'' for the duration of the job was held to be a mere quotation. Maryland Supreme Corp. v. Blake Co., 279 Md. 531, 369 A.2d 1017 (1977) appears to be to the contrary.

Conn. - P. Berry & Sons v. Western Union Telegraph Co., 109 Conn. 371, 146 A. 501 (1929) , price quotation.

Ill. - Jones v. Eagle II, 99 Ill.App.3d 64, 54 Ill.Dec. 350, 424 N.E.2d 1253 (1981) . A property report concerning condominium conversion, that listed apartment prices, was not an offer to sell in violation of an ordinance.

Iowa - Patton v. Arney, 95 Iowa 664, 64 N.W. 635 (1895) , defendant wrote that his steers ''ought to be worth $4.25''.

Me. - State v. Peters, 91 Me. 31, 39 A. 342 (1897) , quotation of prices.

Mass.; Conn.- Mellen v. Johnson, 322 Mass. 236, 76 N.E.2d 658 (1948) ; Ashcroft v. Butterworth, 136 Mass. 511 (1884) ; Smith v. Gowdy, 90 Mass. (8 Allen) 566 (1864) .

Minn. - Beaupre v. Pacific & A. Tel. Co., 21 Minn. 155 (1874) .

N.Y. - Saltzman v. Barson, 239 N.Y. 332, 146 N.E. 618 (1925), modifying 210 A.D. 84, 205 N.Y.S. 548; Blakeslee v. Nelson, 212 App.Div. 219, 207 N.Y.S. 676 (1925) , aff'd, 240 N.Y. 697, 148 N.E. 763 , ''I will not sell for less than $56,000''.

N.C. - Cherokee Tanning Extract Co. v. Western Union Tel. Co., 143 N.C. 376, 55 S.E. 777 (1906) .

Ohio - Craft v. Elder & Johnston Co., 38 N.E.2d 416 (Ohio App.1941) . See § 25 above.

Or. - Courteen Seed Co. v. Abraham, 129 Or. 427, 275 P. 684 (1929) , following the Nebraska Seed case.

Eng. -Boyers & Co. v. Duke, (1905) I.R. 617, 3 B.R.C. 220.

In Richards v. Flower, 193 Cal.App.2d 233, 14 Cal.Rptr. 228 (1961) , the plaintiff wrote: ''please advise us by return mail the cash price you would expect to receive'' (for a specified lot), stating further that he wished to deal with the defendant directly instead of through agents. The defendant replied: ''Thank you for your inquiry ... I see no reason why we could not deal directly on this matter... Considering what I paid for the lot, and the taxes which I have paid I expect to receive $4,500 for this property. Please let me know what you decide.'' The plaintiff replied by wire, ''Have agreed to buy your lot on your terms ...''. The defendant disregarded the telegram and sold the lot to another person. In the plaintiff's suit for specific performance the court held that the defendant's reply was not operative as an offer. In the absence of extrinsic evidence, the defendant had no reason to know that the plaintiff would interpret his written words as an offer.

(n3)Footnote 3. See Restatement (Second) of Contracts § 26 comment c.

(n4)Footnote 4.

U.S. - Interstate Indus. v. Barclay Indus., 540 F.2d 868 (7th Cir.1976) .

Wis. - Moulton v. Kershaw, 59 Wis. 316, 18 N.W. 172 (1884) .

(n5)Footnote 5.

Ky. - Fairmount Glass Works v. Grunden-Martin Woodenware Co., 106 Ky. 659, 51 S.W. 196 (1899) . ''Please advise us the lowest price you can make us on our order for ten carloads of Mason green jars....''

(n6)Footnote 6.

Cal. - Gibson v. De La Salle Institute, 66 Cal.App.2d 609, 152 P.2d 774 (1944) . The proposal did not use the term ''offer.'' Instead it read ''Find it necessary to ask following prices...'' But it also said ''Please wire today if interested in samples and sales contract will go forward.'' (Emphasis by the court). The proposal was found to be an offer.

Haw. - Earl M. Jorgensen Co. v. Mark Constr. Inc., 56 Haw. 466, 540 P.2d 978 (1975) . The court stressed the detailed nature of the terms.

(n7)Footnote 7. Editors Press, Inc. v. United States, 415 F.Supp. 407 (D.Md.1975) .

(n8)Footnote 8.

Conn. - Jaybe Constr. Co. v. Beco, Inc., 3 Conn.Cir. 406, 216 A.2d 208 (1965) (see § 2.2 above).

Md. - Maryland Supreme Corp. v. Blake Co., 279 Md. 531, 369 A.2d 1017 (1977) .

Mass. - Cannavino & Shea, Inc. v. Water Works Supply Corp., 361 Mass. 363, 280 N.E.2d 147 (1972) , appears to be contrary to the statement in the text. However, it was artfully distinguished in Loranger Constr. Corp. v. E.F. Hauserman Co., 6 Mass.App.Ct. 152, 374 N.E.2d 306 (1978) , aff'd, 376 Mass. 757, 384 N.E.2d 176 .

Miss. - C. E. Frazier Constr. Co., Inc. v. Campbell Roofing & Metal Works, Inc., 373 So.2d 1036 (Miss.1979) .

(n9)Footnote 9. In Leo F. Piazza Paving Co. v. Bebek & Brkich, 141 Cal.App.2d 226, 296 P.2d 368 (1956) , the plaintiff, a general contractor, asked defendant to make a bid on a portion of the work so that plaintiff could use it in making his bid on the project. In various conversations, the defendant said he did not like the specifications and could not make a ''firm bid.'' Being pressed, however he named a figure per cubic yard that the plaintiff could use if he wished to take a chance on interpretation. The plaintiff used that figure and made his bid, but the defendant refused to perform after defendant attempted to accept his purported offer. The court held that their negotiations showed that the defendant had made merely a quotation and that the plaintiff was not justified in understanding it to be an offer.

(n10)Footnote 10. McCarty v. Verson Allsteel Press Co., 89 Ill.App.3d 498, 44 Ill.Dec. 570, 411 N.E.2d 936 (1980) .

Section 2.5 should be read with § 1.11, 2.1-2.4, 2.6 and 2.7 of this treatise as there are many over-lapping matters among them.

(n11)Footnote 11. For example, Usemco v. Marbro Co., Inc., 60 Md.App. 351, 483 A.2d 88 (1984) . Seller's proposal was not an offer. Language, ''proposes to offer for sale,'' indication that price had to be calculated, and language stating it was subject to standard conditions of seller, but not stating what these conditions were, all indicate that it was only a quotation.

(n12)Footnote 12.

Ia. - Denniston and Partridge Co. v. Mingus, 179 N.W.2d 748, 752 (Iowa 1970) . ''An estimate is equivalent of ''more or less'' and does not pretend to be based on absolute calculations. Use of the word precludes accuracy.''

Minn. - Malmin v. Grabner, 282 Minn. 82, 163 N.W.2d 39 (1968) .

Mo. - Klein v. Puritan Fashions, Inc., 439 S.W.2d 229 (Mo.App.1969) .

N.Y. - Lynch v. Fusco, 66 N.Y.S.2d 484 (City Ct.1946) .

Nev. - Clark Sanitation, Inc. v. Sun Valley Disposal Co., 87 Nev. 338, 487 P.2d 337 (1971) . ''An estimate is an opinion and an estimate of value is an opinion as to value upon which reasonable men may hold differing views.''

Ohio - Atelier Design v. Campbell, 68 Ohio App. 3d 724, 589 N.E.2d 474 (Ohio App. 1990).

S.C. - Hinson-Barr, Inc. v. Pinckard, 292 S.C. 267, 356 S.E.2d 115 (1987) .

(n13)Footnote 13. See Parker v. Meneley, 106 Cal.App.2d 391, 235 P.2d 101 (1951) . Estimate was clearly an offer to do the work, although estimated price was probably not a fixed price.

(n14)Footnote 14.

Md. -Consumer protections statutes and regulations are cited in State v. Cottman Transmission Systems, Inc., 75 Md.App. 647, 542 A.2d 859 (1988) .

Ohio -Regulations are adverted to in Atelier Design v. Campbell, 68 Ohio App. 3d 724, 589 N.E.2d 474 (Ohio App. 1990) and Crull v. Maple Park Body Shop, 36 Ohio App.3d 153, 521 N.E.2d 1099 (1987) .

(n15)Footnote 15. United States v. Briggs Mfg. Co., 460 F.2d 1195 (9th Cir.1972) .

See also Hinson-Barr, Inc. v. Pinckard, 292 S.C. 267, 356 S.E.2d 115 (1987) where an invoice deviating materially from an estimate was a material alteration under U.C.C. § 2-207.