FAR 13.004—Legal effect of quotations.
Plain-English Summary
FAR 13.004 explains the legal effect of a supplier’s quotation in simplified acquisition and purchase order practice. It covers three core topics: that a quotation is not an offer, that a Government order issued in response to a quotation is itself the offer, and that a binding contract is formed only when the supplier accepts that order. It also addresses how acceptance may occur—either by the supplier’s written notice, by furnishing the supplies or services, or by substantial performance—and it gives the Government the right to withdraw, amend, or cancel its offer before acceptance. In practice, this section matters because it determines when the parties are legally bound, which affects ordering, cancellation, disputes, and whether the Government can still change its mind before the supplier accepts. It is especially important in purchase order environments where the exchange of quotes and orders can look informal but still has real contract consequences.
Key Rules
Quotations Are Not Offers
A supplier’s quotation is only an invitation or statement of terms; it is not an offer that the Government can accept to create a contract. This means the Government cannot form a binding agreement merely by accepting the quotation itself.
Government Order Is the Offer
When the Government issues an order in response to a quotation, that order is the Government’s offer to buy the supplies or services on the stated terms and conditions. No contract exists yet until the supplier accepts that offer.
Acceptance Creates the Contract
A contract is formed only when the supplier accepts the Government’s order. Acceptance may be express or implied, depending on the circumstances and the supplier’s actions.
Written Acceptance May Be Requested
The contracting officer may ask the supplier to confirm acceptance of the order, preferably in writing as defined in FAR 2.101. This helps avoid uncertainty about whether and when a contract was formed.
Performance Can Constitute Acceptance
If written acceptance is not used, the supplier may accept by delivering the supplies or services ordered or by performing to the point of substantial performance. The supplier’s conduct can therefore bind it even without a formal acceptance notice.
Government May Withdraw Before Acceptance
Before the supplier accepts, the Government may withdraw, amend, or cancel its offer by written notice to the supplier. Once acceptance occurs, however, the Government must use the appropriate contract administration or termination procedures, including those in FAR 13.302-4 for purchase orders.
Responsibilities
Contracting Officer
Treat supplier quotations as nonbinding and understand that the Government’s order is the offer. When appropriate, request written acceptance, monitor whether acceptance has occurred, and if needed before acceptance, withdraw, amend, or cancel the offer by written notice.
Supplier/Contractor
Recognize that a quotation does not create a contract and that the Government’s order must be accepted to form one. Indicate acceptance when requested, or accept by delivering the supplies/services or substantially performing the work.
Agency/Government
Use purchase order procedures consistently and ensure personnel understand that an order issued from a quotation is not yet a binding contract. Before acceptance, issue written notice if the Government needs to withdraw, amend, or cancel the offer.
Practical Implications
Do not assume a contract exists just because the Government issued a purchase order after receiving a quote; the supplier still has to accept.
If the Government needs flexibility, it should act before acceptance occurs, because after acceptance the legal posture changes and cancellation/termination rules may apply.
Written acceptance is a best practice when there is any risk of confusion about whether the supplier agreed to the order.
Suppliers can bind themselves through conduct, so starting work or shipping goods may be treated as acceptance even without a signed acknowledgment.
A common pitfall is treating quotes and orders like informal paperwork; under FAR 13.004, the timing and method of acceptance determine whether the parties are legally obligated.
Official Regulatory Text
(a) A quotation is not an offer and, consequently, cannot be accepted by the Government to form a binding contract. Therefore, issuance by the Government of an order in response to a supplier’s quotation does not establish a contract. The order is an offer by the Government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when the supplier accepts the offer. (b) When appropriate, the contracting officer may ask the supplier to indicate acceptance of an order by notification to the Government, preferably in writing, as defined at 2.101 . In other circumstances, the supplier may indicate acceptance by furnishing the supplies or services ordered or by proceeding with the work to the point where substantial performance has occurred. (c) If the Government issues an order resulting from a quotation, the Government may (by written notice to the supplier, at any time before acceptance occurs) withdraw, amend, or cancel its offer. (See 13.302-4 for procedures on termination or cancellation of purchase orders.)