Quote content and binding effect: what to write in it and how long it binds

In brief

• An offer binds its maker under its terms and the Contracts Act. State the validity period and any reservations clearly.
• A stated deadline means, under section 2, that the answer has to reach the party that gave the quote on the final day, not that it is sent in time.
• A rejected offer lapses. Late or modified acceptance is generally a new offer, but the recipient may have to notify the sender promptly if they do not accept it.
• Between businesses, a payment period longer than 30 days has to be expressly agreed (section 5 of the Act on Payment Terms in Commercial Contracts).

A quote should state what will be delivered, the price and how the customer can accept it. Chapter 1 of Finland’s Contracts Act sets the default rules for binding offers and responses. Clear terms help prevent misunderstandings before work begins.

The quotation outline at the end of this guide helps you collect the scope, price and acceptance terms.

A contract arises from an offer and an accepting answer

An offer binds its maker under its terms and the Contracts Act. Acceptance that matches the offer and arrives on time will normally form a contract. State the validity period, any reservations and the acceptance method clearly for both parties.

Section 1 limits its own reach in two directions. The chapter’s provisions do not apply to contracts in a prescribed form whose formation is regulated separately, and they give way if the offer, the answer or commercial or other usage requires otherwise. Established usage in the industry and the quote’s own terms therefore come before the Act’s defaults.

This guide covers business-to-business trade; for a quote to a consumer customer the Consumer Protection Act adds further requirements.

The validity period measures arrival, not sending

When the party giving the quote has set a time limit for the answer, that party is deemed under section 2 to have determined that the answer must reach them within that time. The deadline is therefore not met by the customer writing the acceptance in time: it has to be with the party that gave the quote on the final day.

Without a stated deadline, the time is under section 3 the time that the party giving the quote could reasonably have expected the answer to take when giving it. A reasonable time is a question of interpretation that depends on the size of the deal, the industry and how many people take part in the customer’s decision. There is no point in arguing over whether four weeks was too long: one date in the quote removes the question entirely.

Under section 3, an oral offer must be accepted immediately unless time has been allowed for a reply. Otherwise it is considered rejected. Agree on a response period or send a written quote if the customer needs time to consider it. A price estimate mentioned in conversation is not necessarily a binding offer.

Make the validity period unambiguous. Use an expiry date or a duration with a clear starting date. Both “valid until 17 September 2026” and “valid for 14 days from the sending date” work.

Declining ends the quote; an amended acceptance reverses the roles

Three sections settle the most common situations after the quote has gone out.

Declining ends the quote. If the quote is declined, it has lapsed under section 5 even though the time for which it would otherwise have been valid has not run out. A quote once declined therefore does not come back to life when the customer returns to the matter before the validity ends. The seller can give the same quote again, and a new validity period then starts from the beginning.

Late acceptance is normally a new offer. Section 4 has an exception: if the sender assumed the reply arrived on time and the recipient must have understood this, the recipient must notify the sender without undue delay if they reject it. Otherwise the reply forms a contract.

Modified acceptance is normally a counter-offer. Confirm in writing whether you accept a change, such as a different delivery date. Section 6 includes a similar duty to respond: if the customer believed their reply matched the offer and the seller must have understood this, the seller must reject it without undue delay. Otherwise a contract forms on the terms of the reply.

Withdrawing an offer and correcting a price error

Withdrawal prevents an offer from becoming binding if it reaches the recipient before or at the same time as they take notice of the offer (section 7). An email-open record does not necessarily establish when they became aware of its contents. Report errors promptly and clearly distinguish the corrected version from the original.

Section 32 also matters for price errors. An offer misstated through a writing error is not binding in that form if the recipient knew or should have known about the error. An underestimated cost does not automatically release the seller from the offer. Resolve the situation with the customer before starting work.

The agreement decides: what the parties can agree otherwise

The Act’s provisions are defaults that give way to the quote’s own terms and to commercial usage (section 1). Four things are worth deciding yourself:

• Validity. The date by which the answer has to arrive – and, where needed, the time of day as well when the quote is part of a tender competition.
• Binding effect. Is the quote binding as it stands, or does delivery depend on, say, the availability of goods or a credit decision? Conditional binding effect is written out, because otherwise the quote binds as it stands.
• Price terms. What in the price is fixed, what is an estimate, and which changes pass into the price. The choice of pricing basis has a guide of its own: fixed price or hourly billing.
• Manner of acceptance. How the customer accepts the quote and who on the customer’s side may do it. A named approver and a single channel save the after-the-fact investigation into whether the project manager’s e-mail was an acceptance.

If you use the industry’s general contract terms, name them in the quote and attach them. The customer has to be able to read them before answering.

What goes into a quote

The structure of a quote is established in the market, and the same frame serves a construction bid, a service agreement and a sale of goods.

• The parties. The official names, business IDs and addresses of the seller and the customer, plus the contact person the quote is addressed to.
• Date and validity. The date of the quote, the quote number and the day by which the answer has to arrive.
• Scope and exclusions. What is delivered, in quantities and units; what the customer supplies; which works belong to those ordered separately. An exclusion is what gets disputed afterwards if it is missing.
• Price and pricing basis. A fixed price, unit prices, an hourly rate or a capped price. An estimate is stated to be an estimate, and what would cause it to be exceeded is spelt out.
• VAT treatment. Whether the prices are net or gross and what rate applies to each line. For a business customer the prices are usually shown net, with the rate visible line by line.
• Payment terms and penalty interest. The payment period in days, the invoicing schedule and the basis of the penalty interest.
• Delivery schedule. Agree on a start date or, for example, a period after acceptance. State what the customer must provide before work starts and when delivery will be complete.
• Handling changes. How additional work is ordered, who may order it and how it is priced.
• Manner of acceptance. In what way the customer accepts the quote.
• Attachments. Drawings, the work specification, technical specifications and the standard terms used, each of them named in the quote.

Payment terms and penalty interest in a quote

The payment period is agreed in the quote, and the law sets a limit for it. Under section 5 of the Act on Payment Terms in Commercial Contracts, the payment period may exceed 30 days only if that has been expressly agreed, when the debtor is a trader. A 60-day payment period requested by the customer is therefore possible, but it has to be written into the agreement; a tacit practice is not enough.

Statutory late-payment interest under commercial contracts is the reference rate plus eight percentage points (section 4a of the Interest Act), unless a different rate has been validly agreed. The Bank of Finland publishes the reference rate every six months. Referring to interest under the Act keeps the clause current when rates change.

Agree on the payment term in the quote. A due date fixed in advance in a binding manner governs when interest begins under section 5 of the Interest Act. Merely adding a date to the invoice does not make it agreed. Without a binding due date, the 30-day rule in section 6 applies; no interest is charged for time before the invoice arrived.

The life cycle of a quote in sales

1. Draft. The content is assembled and priced internally. The draft also carries the margin, which is your own organisation’s information.
2. Sent. The content delivered to the customer is locked in the form the customer sees. A change made after sending requires reopening the quote and sending it again, because otherwise the customer’s acceptance attaches to different content than the seller’s own view.
3. Accepted or declined. The acceptance and the decline are recorded with their dates and the name of the person accepting. Without an answer, the quote expires on the validity date.
4. Order or project. The accepted content becomes the frame for delivery: the sections become phases, the hours on the work lines become the hour budget and the net total the contract sum. The quote remains as an attachment to that whole.
5. Invoice. The delivery is invoiced according to the agreed schedule.

From an accepted quote, the content of the lines moves onto the invoice – item, quantity, unit, unit price, discount and VAT rate – along with the payment terms, the basis of the penalty interest, the invoicing schedule and the customer’s own reference details, such as the order number and the e-invoicing address. The agreed exclusions travel with it as the rule for invoicing: they say which part of the work is invoiced as included in the contract price and which as separately ordered additional work. The invoice also needs its own mandatory invoice details, which the quote does not replace.

Example: 14 days of validity and a late conditional answer

A contractor sends the customer a quote for installation work and states the validity period in it.

The customer’s answer of 20 September would be a new offer on two separate grounds: it arrived late, and it changed the delivery time. Either ground is enough. If the contractor’s price has changed in the meantime, it can give a new quote of its own instead of accepting.

The same quote in two other situations:

• The customer declines on 8 September and returns to the matter on 12 September. The quote lapsed on the decline under section 5, even though 17 September had not yet come. A deal arises if the contractor gives the quote again and the customer accepts it.
• The contractor discovers a wrong price. They report the error promptly. Withdrawal timing is assessed under section 7 and the price error under section 32; an open record alone does not settle the issue.

Example: quote lines as a table

An itemised breakdown tells the customer what the price consists of and gives invoicing a ready-made frame. Quantity and unit make the scope measurable: 24 hours of installation work is a different promise from “installation work”.

The net total is €2,960, the VAT at the 25.5 per cent rate €754.80 and the gross total €3,714.80.

The table leaves one thing open, and it is written into the quote’s terms: whether the 24 hours of installation work is a fixed price or an estimate invoiced according to the hours actually worked. The same question applies to the travel. When the lines are picked from a priced item register, the prices and VAT rates stay the same from the quote to the invoice and sales tracking accumulates by item.

Checklist

Go through these before you send the quote.

• The parties. The official names and business IDs of the seller and the customer, and the contact person the quote is addressed to.
• Date and quote number. The quote can be identified later.
• Validity as a date. The day by which the answer has to reach the party that gave the quote is marked.
• Scope as something measurable. Every line has a quantity and a unit.
• Exclusions. The quote states what work falls outside it and what the customer supplies.
• Pricing basis. A fixed price, a unit price, hourly billing or a capped price is named, and an estimate is marked as an estimate.
• VAT treatment. The prices are marked as net or gross and the rate is visible line by line.
• Payment terms. The payment period in days is recorded; a payment period over 30 days with a business customer has been expressly agreed.
• Penalty interest. The interest is expressed as a basis (the reference rate plus percentage points), not as the current period’s figure.
• Delivery time. The start is tied to the acceptance date and to what the customer supplies for the start.
• Change work. The quote states who may order additional work and at what price it is done.
• Manner of acceptance and attachments. The channel for the acceptance and the approver are named, and the attachments and standard terms mentioned are included.