Define: Price Quotation

What Price Quotation Means in a Contract

A Price Quotation is a written statement in which one party sets out the price, and often the terms and conditions, under which it is willing to supply a financial instrument, service, or product to another party. Unlike a casual estimate, a quotation given in a commercial or financial context is typically treated as a firm offer, meaning the quoting party is bound to honor it if the recipient accepts within the validity period stated. This distinction matters because contract law generally requires an offer, acceptance, and consideration for a binding agreement, and a well-drafted quotation is designed to serve as that offer.

In many financial services contracts, a Price Quotation is requested by a client before entering into a transaction, such as purchasing securities, foreign currency, or derivative products. The quoting institution provides the price at which it will transact, and the client's acceptance within the specified window creates the contractual obligation. Because the stakes can be significant, the wording used to describe how and when a quotation is given, and how long it remains valid, is a material term of the surrounding agreement.

How Price Quotation Is Defined or Measured

A Price Quotation is usually defined by reference to several measurable elements: the specific instrument or product being priced, the price itself (often expressed as a bid, offer, or mid-market rate), the quantity or volume covered, and the time window during which the price remains valid. These elements together determine whether a quotation is precise enough to be enforceable as an offer, rather than merely an invitation to negotiate.

Measurement also depends on the method of delivery and timing. A quotation might be given verbally over the phone and later confirmed in writing, or it might be generated automatically through an electronic trading platform. The contract should specify which format governs if there is a discrepancy, and whether a quotation lapses automatically after a set number of seconds, minutes, or business days if not accepted.

• The named instrument, service, or product
• The quoted price or rate
• Any applicable volume or quantity limits
• The validity period before the quotation expires
• The method by which acceptance must be communicated

Where Price Quotation Appears in Agreements

Price Quotation clauses commonly appear in financial agreements, brokerage terms, and trading platform agreements where a client requests a price before committing to a transaction. It is a defined term that anchors related provisions on order execution, settlement, and dispute resolution if the transacted price is later challenged.

The concept also surfaces in broader commercial contracts, including procurement and supply arrangements, where a Request for Proposal process may lead to a formal quotation before a purchase order is issued. See, for example, structures used in a