ᐅ General contractor requests price increase for the entire house
Created on: 6 Oct 2022 15:33
M
MSHausbau
Hello everyone,
I’ve read a lot and hope to get some advice...
We are building a house and are about 90% finished. The fixed price agreement expires at the end of October, and the contract doesn’t specify what happens afterward.
Now our general contractor is asking for €50,000.
His reasoning: As of today, the house is 18.66% more expensive, which is €51,250, so he is demanding €50,000 from us.
He already indicated over the phone that it probably won’t be the full 50K, but the 10K we offered was too low.
Now the question is, are we completely mistaken? I don’t see why we should pay extra for the entire house, only for the items that are still outstanding. That would be about €8,000 if you really apply the 18%.
Do you understand what I mean?
Does anyone have legal experience or some tips on how to argue this?
Our lawyer advises settling in the range of €15,000 to €20,000.
I’ve read a lot and hope to get some advice...
We are building a house and are about 90% finished. The fixed price agreement expires at the end of October, and the contract doesn’t specify what happens afterward.
Now our general contractor is asking for €50,000.
His reasoning: As of today, the house is 18.66% more expensive, which is €51,250, so he is demanding €50,000 from us.
He already indicated over the phone that it probably won’t be the full 50K, but the 10K we offered was too low.
Now the question is, are we completely mistaken? I don’t see why we should pay extra for the entire house, only for the items that are still outstanding. That would be about €8,000 if you really apply the 18%.
Do you understand what I mean?
Does anyone have legal experience or some tips on how to argue this?
Our lawyer advises settling in the range of €15,000 to €20,000.
11ant schrieb:
A partial acceptance—including a hypothetical one—is therefore not involved, so the view that the partial fulfillments specified there mean the contractor is explicitly released is incorrect. Acceptance of individual trades or the entire contract has no impact whatsoever on the occurrence of additional costs and, in my opinion, no influence on enforcing higher costs. The question is whether exceeding the fixed-price deadline can automatically justify an arbitrary price adjustment? I strongly doubt that. What if the general contractor now demands an additional one million? They would have to prove that if necessary, and in my opinion, that is where the main issue lies.
One must be allowed to assume that the price was cost-effective for the general contractor up to day X. From day X onward, it was no longer so. Accordingly, they must break down the costs. I can’t imagine a judge deciding otherwise here.
xMisterDx schrieb:
What more proof is needed to realize that it would be better to just drop it?We all agree that an amicable settlement is always preferable to legal disputes. Nevertheless, it is interesting to understand how the situation would be decided in this specific case if it were to escalate.X
xMisterDx7 Oct 2022 13:48K a t j a schrieb:
The acceptance of individual trades or the entire contract has absolutely no impact on additional costs and, in my opinion, does not influence the enforcement of higher costs. The real question is whether exceeding the deadline of the fixed price automatically allows for an arbitrary price adjustment? I have serious doubts about that. What if the general contractor now demands an additional 1 million? He would have to prove that if questioned, and this is, in my opinion, where the crux of the matter lies.
One must be able to assume that the price was cost-covering for the general contractor up to day X, but not afterwards. Accordingly, he must break down the costs. I cannot imagine how a judge could decide otherwise here. How do you come to the conclusion that the adjustment presented here is arbitrary?
Even if you initially assume the general contractor is just testing the waters to see if it works, they would not be far off from any contractual basis.
There is a fixed price. You don’t have to break anything down—that’s exactly why it’s called a fixed price. We would never, under any circumstances, disclose our calculation, purchase prices, or profit margin to a client. These are strictly confidential details that affect our competitiveness...
So in general, if I buy a house and the contract states a fixed price with the associated services that must be provided for that price,
then as a buyer, I expect the materials for this house to have already been paid for and be in stock at that time.
Otherwise, such a contract is pointless. Not to mention outright fraud.
I could accept it if there is an increase in the hourly wages for the craftsmen building the house. But even these increases should already be factored into the fixed price by the provider or seller. And even if not, 16% of the total price definitely doesn’t justify such a thing.
With such tricks, it can only be called fraud. I don’t know if these prefabricated houses also have staged payments for already completed construction phases. But if so, it is strange that the general contractor only comes with the increase after receiving all of the payments.
And taking the roofing work into your own hands is not an option?
then as a buyer, I expect the materials for this house to have already been paid for and be in stock at that time.
Otherwise, such a contract is pointless. Not to mention outright fraud.
I could accept it if there is an increase in the hourly wages for the craftsmen building the house. But even these increases should already be factored into the fixed price by the provider or seller. And even if not, 16% of the total price definitely doesn’t justify such a thing.
With such tricks, it can only be called fraud. I don’t know if these prefabricated houses also have staged payments for already completed construction phases. But if so, it is strange that the general contractor only comes with the increase after receiving all of the payments.
And taking the roofing work into your own hands is not an option?
X
xMisterDx7 Oct 2022 14:21Bardamu schrieb:
And taking care of the roof covering yourself is not an option?Sure. Just tell the general contractor, "Hey, I'll handle the rest myself, you’ve already been paid enough, I think."
xMisterDx schrieb:
How do you conclude that the adjustment presented here is arbitrary? I discussed the theory with 11ant, not the specific case or even your company.
xMisterDx schrieb:
There is a fixed price. Which changes significantly after the contract is signed.
Price changes in existing contracts regularly lead to special termination rights.