Does unconditional acceptance of a lump-sum estimate create a fixed-price contract?
The word "estimate" is not decisive. A stated lump sum may be a firm offer, an approximate forecast or the starting point for reasonable remuneration, depending on the document and the parties' objective dealings.
An accepted lump-sum estimate may fix the price unless the submission clearly states how and when the amount may be adjusted
The court examines the whole quotation, scope, drawings, qualifications, payment basis and communications. A contractor cannot reserve a cost-plus or remeasurement entitlement merely by labelling a definite lump sum an estimate. If the price is provisional, the submission should state the valuation method, adjustment events, supporting records, treatment of variations and any ceiling. If the wording creates a firm offer and it is accepted unconditionally, the contractor is ordinarily bound by that bargain.
| Issue | Position |
|---|---|
| Definite scope and single lump sum | May constitute a firm offer |
| Approximate forecast only | Must be made objectively clear |
| Cost-plus intention | State allowable cost, fee, records and exclusions |
| Remeasurement intention | State quantities, rates and measurement rules |
| Unconditional acceptance | Concludes the bargain offered |
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