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  1. #1
    Join Date
    May 2011

    Default Is an Estimate Legally the Same Thing As a Bid

    My question involves business law in the state of: Alabama

    Is and Estimate the same thing as a Bid legally?

    The definitions I found:
    An estimate is basically a guess as to how much something might cost. It isn't a legally binding price.

    A bid price is the price somebody bids to do a job. Depending on the clauses in the contract for this bid it's a legally binding amount. The job has to be done for that price.

    Reason for my question:

    I have been a contractor here in Alabama for 20+ years and have given customers estimates and never have had a problem or complaint until now.

    I gave and Estimate to my half brother for an insurance claim, I have done this for family members in the past. We did not try to disguise this, we have the same last name. I made sure my bid was higher than the others because I really didnít want the job.

    The Estimate involved opening up a wall and repairing the duct work and repairing the wall. The family member could not find just an HVAC person to do the job because of the structural work. If for some reason I would have gotten the job I would have subbed the HVAC part out.

    The insurance company sent all the estimates to the Alabama HVAC Board because they said none of the contractors that gave estimates were licensed HVAC contractors. The HVAC board said they were going to fine me $2,000.00 for bidding an HVAC repair.

    I called the Alabama Home Builder Board and they were surprised because contractors bid HVAC in their jobs all of the time and never heard of this before. They told me to send them a copy of the letter when I receive it from the HVAC Board.

    The HVAC board quoted me the law Alabama Section 34-31-24 which says only a licensed HVAC contractor can bid an HVAC job. I called the HVAC inspector and he said that when a home builder bids a job he has to submit the HVAC bid separately and it has to be from a licensed HVAC contractor. How in the ..Ö. can I make money on a sub contractor if I have to show the customer his bid? I have never heard of anything like this.

    So now I am trying to avoid this $2,000.00 fine. I gave an Estimate and the law reads I cannot bid the job. An Estimate and a bid are two totally different things, maybe? My question is would this apply to this law?

    Thanks for any help.

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Is an Estimate Legally the Same Thing As a Bid

    I think your answer turns less on the word and more on the substance of what was requested by your half-brother (or his insurance company) and what you actually submitted. I would be working on a disclaimer for future bids that include HVAC work to attempt to avoid implicating this statute.

    An argument that might be able to be raised is that the definitions section doesn't define "certified contractor" - it defines "Certified Heating and Air Conditioning Contractor" and "Certified Refrigeration Contractor". The intent of the statute appears protectionist - that is, it seems designed to exclude people like you, no matter how qualified, from engaging in business that the lobbyist who got this statute passed intended to go to HVAC contactors - but by using the general term "certified contractor" instead of the specific defined term there's at least an argument to be made that the term includes certified home contractors, not just HVAC contractors.

    This affects more than just you - is there a local home builder's association? If so, consider collaborating with other members to get a legal opinion on the statute, language that you could include in your estimates and bids to avoid implicating the statute, and whether you (through that and other home builder's associations) should lobby for an amendment.
    Quote Quoting Code of Alabama, Sec.34-31-24. Only certified contractors to advertise, etc.; use of license; issuance of license.
    (a) No individual, partnership, or corporation shall advertise, solicit, bid, obtain permit, do business, or perform the function of a certified contractor unless the person or persons in responsible charge, as defined in Section 34-31-18(12), are certified contractors.

    (b) Every contractor licensed under this chapter shall display the contractor's certification number and the company name on any and all documentation, forms of advertising, and on all service and installation vehicles used in conjunction with heating, air conditioning, and refrigeration contracting.

    (c) A contractor licensed under this chapter may not permit the use of his or her license by any other persons.

    (d) No official charged with the duty of issuing licenses to any individual, partnership, or corporation to operate a business as a certified contractor shall issue such license unless there is presented for inspection a certificate of qualification as provided for herein issued by the board to the individual or to some person in responsible charge with the partnership or corporation.
    Quote Quoting Code of Alabama, Sec. 34-31-18. Definitions.
    For the purposes of this chapter, the following terms shall have the meanings herein ascribed to them unless the context clearly indicates otherwise:
    * * *

    (5) Certified Heating and Air Conditioning Contractor. Any individual or any regularly employed person for any partnership or corporation who for hire is engaged in the installation or service and repair of heating and air conditioning systems.

    (6) Certified Refrigeration Contractor. Any and all legal entities engaged in the business of refrigeration contracting and servicing, installation, and repair.
    * * *

    (12) Responsible Charge - The direction of projects involving the installation or service and repair of heating, air conditioning, and refrigeration systems requiring initiation, professional skills, technical knowledge, and independent judgment.

  3. #3
    Join Date
    Jan 2006

    Default Re: Is an Estimate Legally the Same Thing As a Bid

    How in the ..…. can I make money on a sub contractor if I have to show the customer his bid?
    if you don't already know that, you are either very new to the game or it's time to leave the game. It happens a lot in the construction I deal with. Heck, in a lot of cases, the bids are legally required to be made public. That hasn't stopped a GC from making money yet.

    Neither a bid nor an estimate are legally binding. The contract to perform based on the bid or estimate is what would bind either party to the numbers. Depending on how you wrote the contract, either or neither could be binding.

    but none of that is relevant to you and your situation. You are being charged with providing a bid for HVAC. To determine if the charge is valid, you have to determine what the state considers a bid and what the law defines as providing a bid to a customer. I believe the statutes support the requirement that an HVAC contractor provide the bid but not only just a bid, any act that also is described: advertise, solicit, bid, obtain permit, do business, or perform the function of . Even an estimate would be illegal due to the other acts listed.

    so, simply put:

    I gave an Estimate and the law reads I cannot bid the job
    the law does not stop at providing a bid. What you did was also within the restrictions listed within the law.

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