Binding vs. Non-Binding Proposals: What You Need to Know

You send out a proposal – and the client accepts. Are you now committed? Must you deliver, even if your situation has changed? That depends on whether your proposal was binding or non-binding.

In this article, you'll learn the difference, when to use which, and how to protect yourself legally.

The Key Difference

	Binding Proposal	Non-Binding Proposal
Commitment	You're bound to price and scope	You can still change or decline
Acceptance	Contract forms immediately	You must still confirm acceptance
Risk	Higher for you	Lower for you
Client Trust	Higher	Somewhat lower

Binding Proposal: What Does It Mean?

A binding proposal is legally an offer. When the client accepts this offer, a contract is formed – without you needing to agree again.

Example:

You write: "For developing the web app, I offer you a fixed price of $15,000. This proposal is valid until February 15."

The client responds on February 10: "We accept your proposal."

→ The contract is formed. You must deliver, the client must pay.

When Is a Proposal Automatically Binding?

In most jurisdictions, an offer with clear terms (price, scope, timeline) is considered binding unless stated otherwise. If you send a proposal without limitations, you're bound to it – at least for a "reasonable period."

What's reasonable depends on the case. For IT projects, that's typically 2-4 weeks.

Advantages of Binding Proposals

• Professionalism: Client knows exactly where they stand
• Trust: You stand by your word
• Faster decisions: No back-and-forth needed
• Clear terms: Both sides know what applies

Disadvantages of Binding Proposals

• Price commitment: If you miscalculated, too bad
• Capacity risk: If client accepts after 3 weeks, you might have to cancel other projects
• Market changes: Costs can change (licenses, subcontractors)

Non-Binding Proposal: What Does It Mean?

A non-binding proposal is an invitation to negotiate – you're essentially saying: "This is roughly what my proposal looks like, but we'll finalize the details."

Example:

You write: "I estimate the project at approximately $15,000. The final price depends on detailed analysis."

The client responds: "Sounds good, let's do it."

→ No contract! The client has made an offer that you still need to accept.

How Do You Make a Proposal Non-Binding?

Through clear language:

• "Non-binding proposal"
• "Subject to change"
• "Estimate only"
• "Subject to final calculation"
• "Prices subject to change"

Important: The term must be clear. "Approximate prices" or "estimate" aren't automatically non-binding.

Advantages of Non-Binding Proposals

• Flexibility: You can still adjust the price
• Less risk: Not bound by calculation errors
• Buffer: If client agrees months later, you can decline

Disadvantages of Non-Binding Proposals

• Less trust: Client might think you don't stand by your word
• More questions: "Is this the final price?"
• Delays: Extra confirmation step needed

When to Use Which?

Use a Binding Proposal When:

• You know the scope exactly (clear brief)
• The calculation is solid
• The client will decide soon
• You have capacity
• It's a standard project

Use a Non-Binding Proposal When:

• Scope is still unclear
• You're waiting on supplier prices
• The proposal is based on a quick estimate
• The inquiry was a while ago
• You're unsure about capacity

The Hybrid Solution

In practice, many consultants use a middle ground:

"This proposal is binding and valid until January 31, 2025. After this date, we reserve the right to adjust pricing."

This combines commitment (client has certainty) with flexibility (you're not bound forever).

Legal Language Examples

For Binding Proposals

"This proposal is binding and valid until [date]. Acceptance may be in writing or by email."

"Upon acceptance of this proposal, a contract is formed under the stated terms."

For Non-Binding Proposals

"This proposal is non-binding and subject to change. A contract is formed only upon our written confirmation of your order."

"The stated prices are estimates. The final price will be determined after analysis of the specific scope."

For Hybrid Solutions

"This proposal is binding until [date]. For acceptance after this date, we reserve the right to adjust pricing according to current market conditions."

"The fixed price applies if project starts by [date]. For later start dates, recalculation will occur."

Common Mistakes

Mistake 1: No Indication at All

Without a note, proposals are generally binding. Many freelancers send proposals without knowing they're committing themselves.

Mistake 2: Contradictory Terms

"Binding proposal – prices subject to change" makes no sense. Decide.

Mistake 3: Too Long Validity Periods

"Valid for 6 months" sounds customer-friendly but can become a problem. Costs change, capacities shift.

Mistake 4: No Deadline

Without a deadline, a "reasonable" period applies. What that means is open to interpretation – and leads to disputes.

Mistake 5: Verbal Proposals

Verbal proposals can also be binding but are hard to prove. Always propose in writing.

Special Cases

Revoking a Proposal

You can only revoke a binding proposal if your revocation arrives before or at the same time as the proposal reaches the client. Practically impossible.

After sending, only these help:

• Client declines
• Validity period expires
• Client agrees to revocation

Changes After Acceptance

If the client accepted a binding proposal, those terms apply. Changes are only possible with both parties' consent.

What Belongs in Every Proposal?

Whether binding or non-binding:

1. Clear scope description – What exactly is included?
2. Price – With or without tax
3. Payment terms – When is what due?
4. Validity period – Until when is the proposal valid?
5. Binding indication – Binding or non-binding?
6. Acceptance method – How can the client accept?

Conclusion: What Should You Use?

For most IT projects, I recommend: Binding proposals with a clear deadline (14-30 days).

Why? Because professionalism and commitment build trust. If you calculate well and set realistic deadlines, there's no reason for non-binding proposals.

Non-binding proposals make sense for:

• Very large or complex projects
• Uncertain scope
• Quick "ballpark" estimates

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A good proposal is more than the right legal framework. It needs to convince, show value, and look professional.

With SimpleProposals, you create proposals that are both: Legally sound and visually convincing. Binding terms, deadlines, and payment conditions are pre-formulated – you just customize.

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