Running the Business · Part 2
Estimate vs. quote vs. bid: the legal difference, and the moment a number becomes a contract
Contractors use "estimate," "quote," and "bid" as if they were the same word with different levels of confidence. In law they are different things, and the difference is whether the number can be held against you. An estimate is an approximation and says so; a quote is an offer to do defined work for a fixed price; a bid is a quote submitted in competition, and in California a subcontractor's bid to a general contractor becomes binding the moment the GC relies on it. This lesson gives the legal definition of each, the words that make a number one or the other, how long an offer stays open, and how the home improvement contract law folds the estimate into the contract itself.
What the full lesson covers
- An estimate is an approximation of cost with no promise to do the work at that number. Say so on the document: "Estimate. Approximate. Not an offer. Final price on written contract."
- A quote is an offer: defined scope, fixed price, stated validity period. When the customer accepts it unconditionally, there is a contract (Civil Code 1550, 1585), and the price is the price.
- A bid is a quote in competition. A subcontractor's bid to a GC binds the sub once the GC relies on it in the prime bid (Drennan v. Star Paving), even before the GC formally accepts. Bid numbers are checked twice and never revised down after the GC has used them.
- An offer can be revoked before acceptance, and it lapses after its stated period or a reasonable time (Civil Code 1587). Put the period on the quote: 30 days is common.
Unlock the full lesson
This is the public summary. The full lesson has the method, the worked cases, the checklists and the templates:
- All in-depth lessons, exam prep and After the License
- 1,200+ practice questions
- AI tutor (100 messages included)
- 18+ hours of audio lessons
- Full-length practice exams
- Pass guarantee
More lessons in Getting Work
- 1Where the first ten jobs actually come from
- 2Supply-house relationships and credit: the account, the terms, the personal guarantee, and the notice your supplier sends your customer
- 3Subbing to general contractors: how to get on the list, what they check, and the four clauses in the subcontract that matter
- 4Property managers, home-warranty companies, and realtors: volume vs. margin, and the paperwork each one lives on