As good as your word?

When is a contract not a contract?

That's what Working Lunch viewer Sam Thomas of Cheltenham was wondering after his experience with Yellow Pages.

Sam wanted to take out an advert in the phone directory.

He met a saleswoman to discuss prices and she told him it would cost £333.

She wrote the figure on the back of her business card.

When Sam got back in touch to buy the ad space, he was told the price was now £561.

So was the original figure they discussed a binding contract?

"The question of whether or not the agreement was in writing is a bit of a red herring," says consumer lawyer Ajay Patel.

Intention

"You can have a contract that's just as binding which has got no writing at all, that is purely oral.

"The real question is whether there are all the elements of a contract.

Ajay Patel: Red Herring

"Was there an intention to create legal relations? Did the parties when they had this discussion think they had entered into a legally binding deal or was there still some negotiation to be done?"

Yellow Pages say it was a friendly chat at that stage.

However, because of the confusion they did make a gesture of goodwill to Sam.

But his experience raises interesting questions.

A contract is needed as the basis for any legal relation.

It doesn't have to be written - verbal can be just as good as something on paper.

But let's suppose Mr A sells Mr B a hat for £1.

Entitled

Once that deal is agreed, it's binding - neither side can pull out without exposing themselves to possible legal action.

However, if Mr A gave Mr B the hat, there would be no contract - Mr A would be entitled to change his mind and ask for it back the next day.

So what's the difference between a quote and an estimate?

In reality, that's not the issue.

The firmer your deal gets, the more legally binding it becomes.

It doesn't matter whether a piece of paper is marked "Quote" or "Estimate".

What matters here is the certainty that the price discussed is the price the buyer will eventually be asked to pay.

Strengthen

Evidence is also important. If someone gives you a verbal quote, write it down at the first opportunity and that could strengthen your case.

It's not black and white by any means - if you have any doubts about what you're getting into, ask for it to be spelled out clearly in writing.

But what happens if you go into a shop and the price you are asked to pay doesn't match you price on display?

Brian Knott and his wife wanted to buy a Ladyshave from Argos. The sale price was £9.99 but it was out of stock.

They were told they could order one, but when they went to pick it up the following week the item was at the full price at £14.99.

In this case, Argos had written on the order that the price would be the price on the day of collection, so they were covered.

Alienate

What Mr and Mrs Knott could have done is to ask that they pay the sale price.

It would have been up to Argos whether they accepted this, although clearly it might be in a shop's interest not to alienate its customers.

This is a common experience when buying a car which not be available for weeks or even months.

A "price accelerator" is often built into the price so that by the time it arrives, the cost has gone up.

Any contract ends in what's called a consideration - agreeing the price.

So it's at this point that the customer should determine exactly how much they are prepared to pay.