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
S
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? 🙄
H
HilfeHilfe11 May 2021 10:05halmi schrieb:
And is it foreseeable that things will improve again in the future? You can forget about the old prices anyway; they're unlikely to come back 😉Correct.
It’s more likely that the margin will be reduced.
H
hanghaus200011 May 2021 16:22SamSamSam schrieb:
So far, he has only hinted at it indirectly.
The bigger issue he described was primarily about procurement, and he casually mentioned 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 very complicated. I have another suggestion. You can accept part of the additional costs, but never without something in return. For example, you could negotiate and contractually agree on a deadline guarantee and/or payment only after defect-free completion.
T
T_im_Norden11 May 2021 16:31hanghaus2000 schrieb:
I don’t understand that. I can refuse any additional work, review change orders, and withhold payment until everything is properly documented. You’d be surprised what is possible. But only those who have learned how this works know that.As a homeowner, you can certainly try that, but the contractor will most likely suspend construction until everything is resolved.S
SamSamSam11 May 2021 16:32hanghaus2000 schrieb:
I have another suggestion. You can accept part of the additional costs, but never without something in return. For example, you could negotiate and contractually agree on a deadline guarantee and/or payment only after defect-free completion. That’s a good suggestion! I will keep it in mind if additional costs come up for me. I also thought about something like maybe having him do the excavation for the paving work for free or at least provide some concession for me there.
F
freithelm17 May 2021 21:25halmi schrieb:
And is it foreseeable that things will improve again in the future? We can forget about the old prices anyway; they probably won’t come back 😉The old prices certainly won’t return, but I think things will stabilize somewhere in the middle, right? But only time will tell. 😉
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