Budgetary Quotation

Budgetary Quotation


Unable to provide a firm quotation to your customer because your software or hardware vendors have yet to finalise their pricing?

A Quotation is an offer (with essential terms e.g. price, quantity, delivery) to supply goods or carry out work. Your offer is capable of acceptance by the customer to result in a legally binding contract.

A Budgetary Quotation is mean to sere as an estimate. Customers often find this useful for the purpose of setting aside a procurement budget. In a Budgetary Quotation, essential terms are vague and uncertain, so they not capable of creating a contact.

If you intend to issue a Budgetary Quotation, be alert to the risk of your customers arguing that it amounts to an offer capable of acceptance. You can incorporate language like:

This Budgetary Quotation is provided solely for budget planning purpose, and does not constitute an offer made by us, that can be accepted by you. If we subsequently submit a offer, that offer will contain more details and may differ in some aspects from this Budgetary Quotation.

Posion Pill – Clauses in legal contracts

Posion Pill – Clauses in legal contracts


  • Time is of the essence
    • “The parties herby agree that time is of the essence with respect to performance of each parties’ obligations under this Agreement.”
    • “Time is of the essence for each and every provision of this Agreement.”
    • This means that strict compliance with specified deadlines and milestones is absolutely vital. If such deadlines or milestones are not complied with, then no matter how short the delay is, the innocent party will generally be allowed to terminate the contract, and claim damages (among other things) from the party in breach.
    • Procurement should avoid “subject to change” or “to be agree”
    • Sales should avoid this contract term at all costs.
  • Liquidated Damages (LD)
    • LDs are a pre-determined sum that a party agrees to pay the other party for a specific breach of contract e.g. for project delay. LDs must be a genuine pre-estimate of the damage; if the sum its disproportionate to the damage it may be construed as a penalty and be unenforceable.
    • There is no need to prove actual loss in order to claim payment of LDs.
    • Where supply of goods or services, ensure that:
      • LDs are limited to delay to one key milestone e.g. delivery date or commissioning date, and not every inter-mediate milestone that is delayed;
      • there is a LDs liability cap; and
      • LDs are computed on the affected goods or services only and not the total contract price.