ᐅ Is a general contractor's price increase after signing the contract due to raw material shortages legally justified?

hampshire schrieb:

The contractual exclusion criteria do not apply. With the fixed price, the supplier takes on the price risk. Price increases are not considered force majeure. Force majeure implies inevitability. For example, by maintaining inventory to minimize risk, the supplier would have had an option to avoid it. Based on the excerpts from the contract, the general contractor cannot make a justified claim. However, the contract might state something else elsewhere.
I agree with @nordanney’s advice to approach this pragmatically. If you solve a problem together at the start, the chances are higher that you will receive better performance in the end. If you remain uncompromising on the first issue and implicitly assume greedy intentions on the other side, the project will take a different course – the risk of stress and poor quality increases.

I find that pragmatic! Best of luck.

That may be true, and every homeowner definitely has that goal!

No one wants a house that is doomed to fail from the start.

Ultimately, it always depends on how “smart” you chose your general contractor.
By that I mean: possibly checking solvency in advance – checking references, and so on...
If you really have the right general contractor, they should be the last to pass on costs to the homeowner and instead stand behind them themselves, trying to negotiate with their suppliers (tradespeople and manufacturers) beforehand.

I see this in our company:

Steel price increases of over 15%. We will NOT implement any price increase this year – this is also a sign to the customer, showing strong solvency and a healthy company.

Splitting €10,000 (approximately $11,000) 50/50 hurts the homeowner MUCH more than the general contractor. For me, 50/50 would never be a satisfactory solution. This should depend on the equity and financial situation behind it. The general contractor doesn’t care about €10,000 (0.0 impact), but for the homeowner it is a significant amount of money...

Personally – and this is how I would act if I were in this situation – I simply don’t see why I should bear the entrepreneurial risk. The general contractor can always raise their fixed price when submitting an offer. One person signs, another doesn’t... But just because the market isn’t cooperating, I cannot simply pass all the risk (or even 50/50) on to the homeowner. That is by far the easiest solution for the general contractor 😀

As I said, if you’re talking about €2,000 (approximately $2,200) afterward, you can always reconsider. If your general contractor is, for example, a “********,” that’s a different story, but nevertheless, I would do everything to get my house without any additional cost.

And let’s be honest: if the general contractor is local or operates regionally and was chosen “smartly,” their reputation is much more important than leaving €10,000 on the table. You just have to speak up loudly enough, and very often you will get what you want – there is a clear reason for this: 90% of homeowners would give in in this situation 😀

nordanney schrieb:

In the end, the one who ends up worse off is always the customer.

Now ask yourself why. I’d say “because they’re the one who’s naive.” The contractors do this professionally. The customer is a layperson 90% of the time.

It starts with complaints about price increases and ends with a lot of change orders. If you don’t make it clear from the beginning that you won’t be taken advantage of, you become a victim.

That’s exactly what announcing additional costs aims for. “Let’s see what happens, even though I don’t have a right to this.” That’s just a way to catch the naive. Or has the original poster already received a written notice of the extra costs?

Guess how many extra cost notices I’ve written, even though I knew they were unjustified. Same goes for change orders.

hanghaus2000 schrieb:

Now ask yourself why. I’d say “because he is the fool.” The contractors do this professionally. The customer is 90% of the time a layperson.

It starts with complaints about price increases and ends with lots of additional claims. Anyone who doesn’t show from the start that they won’t be taken advantage of becomes the victim.

What else is the announcement of extra costs supposed to do? Let’s see what happens, even though I have no claim. This is called fooling someone. Or does the original poster already have the extra cost notification in writing?

Guess how many extra cost notifications I have written even though I knew they were unjustified. The same applies to additional claims.

That is exactly the point I also wanted to make here…

It’s complete nonsense to think you are not “in the right” just because a company has a strong position.

Believe me, I have often “proven” privately that this is not the case… You simply have to stand up for yourself and not accept everything.

The VW diesel scandal is the best example. I know private plaintiffs with run-of-the-mill lawyers who won in court – because the whole thing from VW was simply unlawful. But in the end, 99% give up and accept cheap excuses.

What I’m saying is: Don’t put up with everything… It’s nonsense to think you’re just the “little guy.”

What I keep wondering: So many people work in the private sector – surely including some building owners. You’d think they would know exactly how all this works? 😀

Hausbauer2021 schrieb:

If we were to find ourselves in such a situation, I would suggest, for example, splitting the amount quoted by the general contractor equally. 50/50 because they don't really have a claim to it, but it shows goodwill and ideally satisfies everyone.

The general contractor will be happy. You won't. So at least one party is dissatisfied.

Do you notice something?

exto1791 schrieb:
What I keep thinking: There are so many people working in the private sector – certainly some of them are homeowners too. They should know exactly how everything works, right? 😀

Most homeowners are not professionals. Even the internet (forum) doesn’t really help much with that.

I believe it always depends on the situation when it makes sense to stand firm and when some flexibility is appropriate.
We are talking about amounts that will probably be in the four-digit range, which is not a huge deal in house construction.
Don’t get me wrong, I’m not saying you should give things away for free either.
But insisting on paying absolutely nothing is, in my opinion, nonsense, because although it’s a fixed price, it is based on assumptions that don’t always hold true, which can lead to additional costs. For example: the agreed excavation depth for the foundation is 40cm (16 inches). However, the soil only becomes properly load-bearing at a depth of 50cm (20 inches). At that point, additional costs will inevitably arise because work is required that is not covered by the contract. And if I had always been the strict one about cost responsibilities before, the contractor will try to recover that money now. I can’t even compare the prices for the extra excavation and the addition of material since these items were never listed separately.

I think this requires some tact and not immediately insisting on your legal rights.