Problem: I run a small maintenance company and recently I submitted a price to a property service company. The work concerned the external works to a small block of flats, which included repairs to the render and timber, and painting.
Because this sort of work is my company’s ‘bread and butter’, I would usually use my own labour, as I have on my books plasterers and decorators. The only item I would sub-out is the scaffolding. However, on this job, the client required the work to be carried out in August and September, which is a very busy time for us, so I asked another company to price the work up with the intention of subbing out the whole job to them.
When I received the quote back from the other company, it was very competitive, and I took this up with the director who informed me that he knew it was competitive, but because we were a new client, he wanted to win the work and show us how good his company is, which sounded plausible. I subsequently put on a mark -up, and then submitted our price to my client.
My client accepted our quote and I then went back to the sub-contractor, who then informed me that he could not do the work because he realised he had omitted the scaffolding. I have since gone back to my client and explained to them what has happened, and they replied that although they have sympathy, they have already accepted my quote and if we back out, they will pursue us for damages.
What do I do? If I carry out the work, the job will return a loss of about £35,000, which I can ill-afford, especially as I am having to cope with the current rises in materials.
Response: If your price to your client has been accepted (and the acceptance can be oral or in writing), then you have entered into a legally binding contract and if you do fail to perform, you will be at risk of having a claim made against you for breach of contract, the sum of which could be much more than what you have predicted you could lose.
That said, before you become totally disillusioned, you must see whether you have actually entered into a legally binding contract. I say this because unless your quote is capable of being accepted, and unless your client has unequivocally accepted your quotation, there may not be a contract.
For example, in your quotation, you may have said that the start and completion dates need to be agreed, or you have included some other caveat. In relation to your client ‘accepting’ your quote, what often happens is that the employing party sends over a purchase order which includes extensive written terms and conditions on the back of the purchase order, and if this has happened, although your client may have thought it was accepting your quotation, in fact what has materialised is that a counter-offer has been made, meaning that it is down to you to either accept or reject the offer.
Because of the financial risk to you, I would recommend that you urgently seek professional advice before you take any further steps.
© Michael Gerard 2022
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Author background
Michael is a Solicitor, Chartered Builder & Registered Construction Adjudicator, and is a director at Michael Gerard Law Limited, a solicitors practice regulated by the SRA.