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What if you really did make a mistake on your estimate

June 16, 2022
What if you really did make a mistake on your estimate
          We entered into a Commercial All in One for security system, intrusion and access control.  We agreed to install equipment in areas of the premises which we now find, after the contract is signed, we won’t be able to install the components for one reason or another.  It’s our mistake.  Is there anything in our contract or that you can suggest to deal with this issue.  Right now the customer wants us to install the system or return the contract deposit.
          There are legal principles that come to mind.  Mutuality of mistake means that both parties to the contract made a mistake; the contract is voidable by either without penalty.  But when one party makes a mistake and there is no wrongdoing by the other party, the contract is not voidable.  The party making the mistake has to eat it or suffer the consequence of breach of contract.
          In an alarm contract setting an alarm company who breaches the contract can expect to have to pay a customer the cost of “cover”, which means the cost the customer incurs replacing the first alarm company.  So if you agree to install a system for $5000 and do nothing, and the customer replaces you with another alarm company for the exact system and pays $6000, your damages are likely $1000. 
          The Limitation of Liability provision in your Standard Form Agreement may reduce your exposure.
          If the customer concealed material facts from you that would have changed your estimate then you won’t be held accountable for the mistake you made. 
          In the scenario above, sounds like the customer is willing to let you off the hook, out of the contract, if you return the deposit.  Unless you want to eat the added expense you should accept the customer’s proposal.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301