What is the difference between a quotation and a contract?

• A. A quotation offers a price; a contract is a legally binding agreement once accepted.
• B. A quotation is binding; a contract is just a price offer.
• C. A quotation is not binding; a contract becomes binding only after payment.
• D. A contract is the same as a quotation.

Answer: (A)

A quotation is a price proposal you give to a potential buyer, outlining the cost and terms for supplying goods or services, but it isn’t a binding commitment by either side. A contract, by contrast, becomes a legally binding agreement once the buyer accepts the quotation (and both sides agree to the terms, with the intention to create legal relations and consideration moving between them). So the moment acceptance occurs, the seller is obliged to provide as described and the buyer is obliged to pay under those terms.

This distinction matters because a quotation can be adjusted or withdrawn before acceptance, whereas a contract binds you to perform and accept the consequences if either party doesn’t follow through. The idea that a quotation is binding or that a contract is just a price offer isn’t correct, since binding rights and obligations only arise once there is valid acceptance and the agreement is formed.