ᐅ Is a general contractor's price increase after signing the contract due to raw material shortages legally justified?
Created on: 10 May 2021 11:57
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SamSamSam
Hello,
I recently had a brief phone call with the general contractor, who plans to start building our single-family home in September.
During the conversation, they casually mentioned the current situation with raw material availability and said that this could lead to price adjustments if the situation is not stabilized by then.
We signed the contract for a turnkey single-family home in mid-January at an agreed fixed price.
I have now reviewed this contract again but found no information that would legitimize an additional charge due to this issue. At least, I could not find anything in the contract about it.
Under the section on compensation, I only found the following passage:
“The contractor’s fee is guaranteed as a fixed price. Costs for utility connections—gas, water, electricity, and sewage—are not included in the fixed price and are to be borne by the client.
This fixed price applies until handover unless construction does not begin within six months from the date of contract signing due to circumstances for which the contractor is not responsible.
Additional costs resulting from special requests, official requirements, force majeure, or circumstances for which the client is responsible, as well as the conditions listed in § 3 (1), are not included in the fixed price.”
I should mention that this is a small company. As a layperson, I cannot gauge how much a 50% increase in the price of wood affects the cost of a solid wood house. It would likely mainly impact the roof structure, but to what extent? 🙄
I recently had a brief phone call with the general contractor, who plans to start building our single-family home in September.
During the conversation, they casually mentioned the current situation with raw material availability and said that this could lead to price adjustments if the situation is not stabilized by then.
We signed the contract for a turnkey single-family home in mid-January at an agreed fixed price.
I have now reviewed this contract again but found no information that would legitimize an additional charge due to this issue. At least, I could not find anything in the contract about it.
Under the section on compensation, I only found the following passage:
“The contractor’s fee is guaranteed as a fixed price. Costs for utility connections—gas, water, electricity, and sewage—are not included in the fixed price and are to be borne by the client.
This fixed price applies until handover unless construction does not begin within six months from the date of contract signing due to circumstances for which the contractor is not responsible.
Additional costs resulting from special requests, official requirements, force majeure, or circumstances for which the client is responsible, as well as the conditions listed in § 3 (1), are not included in the fixed price.”
I should mention that this is a small company. As a layperson, I cannot gauge how much a 50% increase in the price of wood affects the cost of a solid wood house. It would likely mainly impact the roof structure, but to what extent? 🙄
S
SamSamSam10 May 2021 20:41apokolok schrieb:
Well, to sum it up: the construction industry is a terrible industry in which, apparently, mostly idiots work.
I mean, here in this country, it’s sometimes regulated down to the day exactly who has to sweep the stairwell and where certain dogs are allowed to poop and where not. But in the construction industry, contracts are more like guidelines. If the crew doesn’t like something, they just stop showing up, sue you until the end of time, or file for bankruptcy.
If I were @SamSamSam, I would clearly tell the general contractor that this is his business risk and that a contractual adjustment is not planned. Period. End of story. I mean, where does it start and where does it stop? Market fluctuations for building materials have existed since building began, sometimes with bigger spikes.
How about the other way around?
@SamSamSam has to reduce working hours due to COVID-19, and now the payments are getting tight. Should the general contractor then kindly lower his prices accordingly? Exactly the same, just ridiculous.
If the guy were an honest businessman, he would chalk it up to bad luck and that would be that. Honestly, if my personal situation allowed it, I’d even tear up the contract in his face and tell him to build with some other fool.
Yeah, he’ll surely find enough, but only because everyone lets it happen.
Alright, enough ranting, I’m going to get myself a beer. So far, he only hinted at it as a side note.
The bigger problem he described was mainly about material procurement, and he casually mentioned how we might handle it financially since nobody could have anticipated this.
If you Google it, the current situation really seems to be very tricky on the German market.
SamSamSam schrieb:
So far, he has only hinted at it as a side note.
The bigger issue he described was primarily about procurement, and he only mentioned in passing how we could handle the financing since no one could have anticipated this.
If you Google it, it seems that the situation on the German market is currently quite complicated. Yes, things are quite intense at the moment.
However, I would expect the market to calm down by the time your construction actually starts.
M
Myrna_Loy10 May 2021 20:49The construction industry is not inherently a bad industry – for years, even decades, craftsmen were driven into bankruptcy. In recent years, the situation has changed, and many companies simply do not want to risk going bankrupt, as they have seen happen to apprenticeships or competitors.
apokolok schrieb:
Well, to sum it up: The construction industry is a crappy industry clearly dominated primarily by idiots.
I mean, here in this country, there are sometimes exact rules down to the day about who has to sweep the stairwell, where which dog is allowed to poop and where not. But in construction, contracts mostly serve as guidelines. If the crew doesn’t like something, they just stop showing up, sue you until the end of time, or declare bankruptcy.
If I were @SamSamSam, I would clearly tell the main contractor that this is their business risk and that contract adjustments are not part of the agreement. Period, end of story. I mean, where does it start and where does it stop? Price fluctuations in building materials have existed as long as construction has. Sometimes with bigger spikes, too.
What if it were the other way around?
@SamSamSam has to reduce working hours due to COVID-19, so now it’s hard to pay the installments. Should the main contractor kindly just lower their prices accordingly? Exactly the same thing, absolutely ridiculous.
If the guy were an honest businessman, he would take it as personal bad luck and move on. Actually, if my personal situation allowed, I would even slam the contract down on him and tell him to build with another fool.
Yeah, he’ll find plenty of those, but only because everyone lets them get away with it.
Alright, enough ranting, I’ll go grab a beer now. Yeah... The construction sector is an asshole. Just like the so-called warranty when buying a car. You can sue, sure. And you can behave like that in any civil dispute as well.
And of course... You can tell the main contractor that. Maybe he swallows it and still does everything perfectly. Or he’s just messing with you. That’s a shot in the dark. And if you’re not affected and don’t carry the risk, it's easy to give advice.
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freithelm10 May 2021 22:56These are truly crazy times right now. We are also in the planning phase and expect to start with the foundation slab around July/August. I recently requested a quote for our roof structure. It’s about double what it was just a few months ago. :/
So now we’re seriously considering whether to wait or bite the bullet and order now. It’s not just the high prices but also the long delivery times and, in some cases, supply shortages.
Unfortunately, everything is getting more expensive these days, and there’s definitely some pressure. 😉 I hope things calm down a bit in the coming weeks.
So now we’re seriously considering whether to wait or bite the bullet and order now. It’s not just the high prices but also the long delivery times and, in some cases, supply shortages.
Unfortunately, everything is getting more expensive these days, and there’s definitely some pressure. 😉 I hope things calm down a bit in the coming weeks.