understanding-contracts

Quotes and contracts

Reading time: 6 minutes

Have you ever been halfway through a project when you suddenly realise that you should have had a contract with your builder?

Don't worry, you're not alone.

All too often work gets started with only an estimate or a verbal agreement in place, and this can make it hard to distinguish what should have happened and where the problem lies.

What’s the difference between an estimate and a quote, and is a verbal agreement not enough?

An estimate is essentially a “best guess” at what your job might cost. It’s a fairly loose way of setting out the scope of work and what you may expect to pay for it but there’s no definitive commitment to do anything for a set price so costs can escalate over time.

Rather than just giving an estimate, a tradesperson might give you a verbal commitment to do your job at a specific price. If you have some record of this then it may be enough to bind them to their word but it’s very difficult to prove “mutual assent” without anything in writing.

A written quote is probably preferable for most work because once it’s accepted it becomes a binding agreement and gives both parties something to rely on to create a mutual understanding of what’s expected.

A quote can take many forms and there’s no universal template for what you should expect. What you need to be on the lookout for with a good quote is that it will explain:

  • Exactly what work will be carried out
  • The total, final price of the job
  • Who is responsible for providing the materials
  • When the work should be completed

Your builder may have their own way of issuing a quote. If not, they can always use the MyBuilder Quote Tool, a product that creates professional quotes and comes with a standard set of contract terms.

What are the benefits of getting a written quote?

Everyone hopes there won’t be any problems with their job but sometimes things don’t go to plan and a written quote creates accountability on both sides.

If issues arise a quote will help you prove the commitment your builder made to you, and it also gives the tradesperson something to rely on to show they’ve done what they said they would.

Crucially, an accepted quote locks in both the work to be completed and the final price. This means your builder will be committed to completing your job for that price even if they have to do more work than initially thought, with no nasty surprises for you further down the track.

Even if you’re just having a small job done, a written quote lets everyone know where they stand and can go a long way to heading off any arguments that may arise.

Once you have a quote you can even wrap a larger contract around it, or use it to insure your project if you want to.

When should you have a full written contract?

In a perfect world, any agreement you make with a tradesperson would be outlined in a detailed document which is signed and dated, but sometimes this just isn’t practical.

There can also be a social taboo around asking for a formal agreement because it could imply a lack of trust, particularly for quite straightforward jobs.

But even for these small jobs, it’s important to make sure everyone’s expectations are the same.

While a verbal arrangement or a quote on its own can constitute a formal agreement, you may want to consider whether your project warrants a written contract on top of this.

Written contracts start to become more important when a job is complex, has staged payments, or is of significant cost.

Your quote will form the basis of this but the contract will set out terms a bit more broadly. These can include things like:

  • The specific description of works. For example, if you’re agreeing to a mixer tap being replaced in your quote but don’t specify a brand in the contract then your tradesperson could be within their rights to replace the mixer taps with any model they choose.
  • The cost. This will be set out in the quote and means there can be no dispute as to what’s being paid for.
  • The payment terms. Will materials be paid for up front? When and how will the final bill be paid? Does the tradesperson require a deposit? Are payments staged and, if so, how? Agree how much is to be paid and when payment is due to avoid disputes later on.
  • The tradesperson’s responsibilities. Do you need the tradesperson to clear up at the end of the job? Is it important that tools are stowed away? Agreeing details like these will help both you and the tradesperson understand what’s expected before work starts.
  • Your responsibilities. Responsibilities are a two way street, so what’s expected of you? Do you need to grant access to the property at certain times? Do you need to provide certain facilities? If heavy objects need moving before the job, is this your responsibility or the tradesperson’s? Agreeing on your responsibilities from the off can avoid any sticky disputes later on.
  • Alterations. If things have to change from the original quote, make sure to confirm this in writing and get signatures if you can. By keeping a copy of the agreed amendments along with the original contract you have something to refer back to if any disputes arise.
  • Defects. Tradespeople will often offer guarantees on their work and/or materials. If they don’t, you should consider confirming which potential defects they’d return to fix and if there’s going to be any cost for this. You should also agree on an appropriate length of time for this offer to stand.

MyBuilder Plus is comprehensive cover for your job that takes away the stress and financial risk if the unexpected happens.

Learn more

What is 'Mutual Assent'?

Mutual Assent is a formal way of saying that both of you agree to the same thing. Mutual Assent should contain both of the following:

  • An 'Offer' (for example, a plumber may 'offer' to replace and refit your mixer taps).
  • An 'Acceptance' (you agree to pay for the works detailed and you both agree to the terms).

Mutual assent can be created verbally but if you have evidence of this via a quote or contract it makes it much easier to prove what was agreed on if needed.

Working with your builder

Having a solid contract is important, but it doesn't replace the need for a good working relationship with your builder.

Even with a contract in place, there can still be miscommunications and misunderstandings. MyBuilder's hiring guides have detailed advice on how to avoid these issues and what to do if it you encounter them.

Peace of mind

The main benefit of getting a written quote or contract is the peace of mind this will give you.

If things go wrong and you’re not able to resolve them with the tradesperson it means you’ll have something tangible to explain why you feel you’ve been let down.

If you find yourself having to go through the courts, a written quote or contract could go a long way to strengthening your case.

Or if you want to be able to avoid the courts entirely, a written quote means you may be eligible to take out MyBuilder Plus for the ultimate peace of mind.

MyBuilder Plus is an optional insurance policy designed to guarantee the delivery of your quote for the price you agreed. It covers against:

  • The job being left incomplete
  • Work that’s substandard or fails to meet building regulations
  • Contractors disappearing with your money
  • Tradespeople who go bust before completing work
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