Ehler Marine & Industrial Service Co. v. M/V Pacific Yellowfin (Ship)

In Ship Building and Repair on (Updated )

Précis: A repair quote was held to be an agreed price when given in response to a request for a "reasonably accurate estimate" and "hard" numbers.

Facts: The plaintiff ship repairer provided an estimate to re-fasten and re-caulk the defendant’s wooden vessel pursuant to a request for proposals that asked for a “reasonably accurate estimate” for 15 seams below the waterline. The estimate included some items that were quoted on the basis of the actual time and materials to be expended and other items, including the re-caulking and re-fastening, that were not so qualified. The final costs for the re-caulking and re-fastening exceeded the estimate. Additionally, when the vessel arrived at the repair yard it was discovered that there were more than 15 seams below the waterline that required re-caulking and re-fastening. It was agreed that the additional seams would be repaired but the plaintiff thought the agreement was to proceed on a time and materials basis whereas the defendant thought there would be proration of the original contract price. Finally, during the launching of the vessel, the vessel was damaged. The plaintiff commenced proceedings to recover the actual amount of the re-caulking and re-fastening and the defendant counterclaimed for the damage caused to the vessel during launching.

Decision: Judgment for the plaintiff, in part. The counterclaim is dismissed.

Held: The plaintiff argues the estimate was only a “best guess” and that it was entitled to charge on the basis of actual time and materials expended on the repair. The defendant argues that the estimate was an agreed amount that would be charged. The proper test is not what the parties subjectively believed the terms of the contract to be but what a reasonable person would understand the contract to be. Such a person would conclude in the circumstances that the estimate was an agreed price. The fact that the estimate did not qualify the disputed items as being billed on a time and materials basis favours this interpretation as does the fact that the defendant asked for a “reasonably accurate estimate” and “hard numbers”. In relation to the additional seams, a reasonable person would similarly conclude that the price for the additional work would be prorated based on the original contract. With respect to the counterclaim, the evidence of the damage is incomplete and contradictory and the counterclaim is therefore dismissed.