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This article is focused on New Zealand law and explains issues from a Common law perspective.
How to give a legally binding quote within New Zealand
Put the quote in writing
When one operates a business involving the offering of goods and/or services, it is common practice to give a quote before taking on a job. The best way to ensure that a quote will be legally binding is to do all of the following:
- record the quote in writing, preferably as part of written terms of trade (see How to draft terms of trade)
- give the written quote to the prospective customer
- keep a copy for yourself
- get the customer to sign a copy of the quote (or the terms of trade if you have used them) before supplying the goods or services
Be specific in your quote
Quotes for particular jobs can be tailored to suit the particular circumstances. It is useful to be as specific as possible in the quote about your understanding of the goods or services that the customer requires. This will ensure that you can revise the quote if the customer has different requirements.
Terms of trade & supply agreements
It is preferable that you give the potential customer your written terms of trade together with the written quote for the goods or services. This will ensure that the customer is fully aware of the basis on which you will supply the goods or services.
Quotes are also commonly included in a "supply agreement", which is an agreement made between a supplier and a customer. As a minimum, a supply agreements sets out what goods or services are to be provided, when, and at what cost. Supply agreements are therefore similar to terms of trade.
For more advice also see the New Zealand Government's website Consumer Protection.
- It is advisable to have a standard terms of trade or supply agreement that you can tailor to individual circumstances. This will ensure that you minimise the possibility of bad debt. A solicitor can help you draft this document and explain the best procedure to follow to ensure that it is legally binding.
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