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Can a construction company raise the price of a fixed contract after starting the job?
I entered into a fixed-price contract for soil remediation. After beginning the demolition, the contractor experienced difficulty removing the foundations. He argued that the concrete structures it encountered differed from the information set forth in the contract. Can he raise the price and ask for equitable adjustment?
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Question: I am the owner of a small construction company and I recently signed a contract with a private company to...This site does not provide legal advice and users of this site should not interpret any of the information presented here as legal advice. The information provided merely conveys general information related to commonly asked legal questions. We are not a law firm and the employees responding to questions are not acting as your legal attorney. You should ultimately consult with a Lawyer for your case.
Answers
Where a construction contract does not have a differing site conditions (DSC) clause, the builder/contractor assumes the risk that its performance will cost more than the contract price. However, where the contract has a DSC clause, a contractor can recover equitable adjustment in construction contract: final work/services different from what is proposed. Equitable adjustment is available if there is a material difference between the subsurface conditions encountered during the performance of the contract and those set forth in the contract. The conditions that the contractor found must be reasonably unforeseeable at the time of bidding, and he or she must have reasonably relied upon his or her interpretation of the contract and associated documents. Furthermore, the material difference between anticipated and encountered conditions must have caused damage to the contractor. The contract must mention the site condition for the contractor to be eligible for an equitable adjustment. The recovery would consist of any hike in the cost of performance brought on by the material variations in subsurface conditions.
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Posted by Frank Rivero on 11 May 2010
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