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I have a question about contract law within the following scenario:

Say the original contract/engagement letter is for 2 tax filings with Acme Tax Accountants. Each filing is $1,000 for a total of $2,000. This service is performed and paid.

The next year a third tax filing is done by Acme Tax Accountants but no new contract/engagement letter has been signed with the client. At the end of this service a $1,500 invoice is sent (a 50% increase).

My understanding of contract law is the original fees are implied if no new explicit agreement is signed and therefore the invoice amount should be $1,000. Is that correct?

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  • The description you provide is unclear. What does the engagement entail? Is it for a specified period or for a number of filings? If the latter, is that what you mean by "with a firm for two filing"? If not, what do you mean by that phrase? The terms of the contract or "engagement letter" are crucial for addressing your inquiry. Nov 24 at 20:18
  • @IñakiViggers Say the original contract/engagement letter is for 2 tax filings with Acme Tax Accountants. Each filing is $1,000 for a total of $2,000. This service is performed and paid. The next year a third tax filing is done by Acme Tax Accountants but no new contract/engagement letter has been signed with the client. At the end of this service a $1,500 invoice is sent (a 50% increase). My understanding of contract law is the original fees are implied if no new explicit agreement is signed and therefore the invoice amount should be $1,000. Is that correct?
    – Adgezaza
    Nov 24 at 21:58
  • So you engaged someone to file your taxes without arranging a price, assuming it would be the same price as before? There's a lesson there. Even if there was a contract, it may have provisions allowing increases in prices. There are many reasons why the price may change: it may be a marketing thing, but may also reflect a change in your circumstances or in tax laws, as well as inflation, increased costs for the business, etc.
    – Stuart F
    Nov 25 at 16:27

2 Answers 2

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My understanding of contract law is the original fees are implied if no new explicit agreement is signed and therefore the invoice amount should be $1,000. Is that correct?

No. At the outset, the presumption that the price would be equal to that of filings covered in the engagement letter is inaccurate. The actual terms of the engagement letter might support a different conclusion, though, which is why I asked about them.

The offer in the engagement letter seems to be just a marketing practice, and as such it is neither uncommon nor unlawful. The rationale for that marketing practice is that offering [in this case] the first two tax filings at a lower price is likelier to persuade new customers to try the services the company provides. Thereafter, those customers will be billed what the company would call a normal or ordinary price.

Statutory law does not provide specific constraints to how greater the ordinary price. But the details would help ascertain whether an excessive, unannounced increase amounts to what is known as unfair and misleading practices or otherwise contravenes consumer protection laws. These laws vary by jurisdiction and might or might not defeat the argument that the customer bears the risk of mistake. See Restatement (Second) of Contracts at §154(b).

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Your understanding is not correct

If a contract is silent on price then a reasonable amount is implies. Prices charged in the past will inform what is reasonable but they don't define it.

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  • Can you do so without notice? And define reasonable? I don't think 50%-100%+ is reasonable?
    – Adgezaza
    Nov 25 at 14:04
  • @Adgezaza why is this without notice? You knew you would have to pay something- you just erroneously assumed it would by $1,000.
    – Dale M
    Nov 25 at 19:58
  • @Adgezaza reasonable means reasonable in the circumstances. 50% might be reasonable in periods of high inflation. It might be reasonable if the previous fees were discounted. It might be reasonable if that’s what other accountants charge for similar circumstances.
    – Dale M
    Nov 25 at 20:00

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