Knowing where you stand legally is incredibly important for businesses – so we’ve put your legal questions to our experts!

Where do I stand legally if my estimated price for a job is way under what it cost in reality?

Michael Scherini, Founder at Scherini Lawyers, says:

When a service provider issues an estimate for a job that ultimately costs significantly more, their legal position largely depends on whether the estimate was binding, how it was communicated to the client, and whether any relevant contractual terms apply.

An estimate is generally regarded as an approximate cost prediction rather than a fixed price. If it is clearly labelled as an estimate and there is no contractual agreement to perform the work at that price, the service provider may be entitled to charge for the actual cost incurred – provided the final amount remains reasonable.

However, if the estimate is presented as a fixed-price quote, or if the client reasonably relied on it to their detriment, disputes may arise. In Australia, consumer protection laws, including the Australian Consumer Law (ACL), may apply, particularly if the pricing was misleading or deceptive under section 18 of the ACL. Businesses must ensure their pricing representations are not likely to mislead customers.

To mitigate legal risk, service providers should:

• clearly state whether a price is a non-binding estimate or a fixed quote
• include terms allowing for adjustments based on unforeseen circumstances
• communicate with clients promptly if costs escalate beyond expectations.

If a dispute arises, parties may seek resolution through negotiation, mediation, or legal action. Consulting a lawyer is advisable to assess specific circumstances.

I often use subbies, but don’t have anything formal in place. What do I need? 

Oliver Morrisey, lawyer, says:

Using subcontractors without formal agreements might seem like it saves time, but it leaves your business open to disputes, liability issues, and financial risks. A subcontractor agreement can simplify your work relationships and shield you from unnecessary trouble.

The most important reason to have a subcontractor agreement is to clearly define responsibilities. Without this, misunderstandings can arise about who is responsible for certain tasks, delays, or even costly mistakes. I worked with a contractor who ran into trouble when a subcontractor they hired improperly installed wiring, causing delays and extra costs. Since there was no formal agreement, the contractor ended up covering the costs to maintain the client relationship. That was an expensive lesson for them.

A subcontractor agreement helps you avoid this by explicitly stating the scope of work, deadlines, and who is liable for issues. For example, it should include a clause requiring subcontractors to follow safety and industry standards and carry their own insurance. This protects you from claims and ensures they are responsible for correcting any mistakes.

You should also include terms for payment, timelines, and what happens if the subcontractor fails to meet expectations. By setting everything out in writing, you protect your business and create a professional relationship built on clarity.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.