Price adjustment clause in the contract with the general contractor

The discussions took place repeatedly last year. The forum's conclusion was relatively unanimous that when building with GU there is no interim billing, since the acceptance date = delivery date and the time of performance, so overall the acceptance date applies for the calculation of VAT.

The forum can hold whatever opinion it wants. It is totally off-topic anyway.

In my case, I agreed to an offer from the construction company. Afterwards, a planning contract was drawn up, where initially only up to the building permit is paid. It was about 14,000 €. If the building permit fails or the financing does not work out, it remains at 14,000 € and we part ways. If it continues, the 14,000 € will be deducted from the offer value. He has also already reported the construction site to his suppliers and secured the prices. Just yesterday I inquired whether the offer prices remain. He said the increase only applies to new contracts.

Hi,

I think price adjustment clauses should not be agreed upon (if you are the client). For steel, for example, it is customary – there is a price commitment for the expected necessary period, and if the construction time exceeds that period, the price should be renegotiated. Either the contractor trusts themselves to do it or not. That is their entrepreneurial risk (at least that’s how I see it). A price adjustment clause takes away all their risk, which is unfair. The calculation includes AGK+BGK+WuG (i.e. general business costs, site overheads, risk and profit) – with such a clause, they pass their risk on in the supplier prices. If at all, as already described, it can be stated that prices are to be renegotiated if there is an increase of +50% – but that is not very nice for the client.

Regarding the question of whether price increases should generally be passed on to the client, it is a very difficult question. I would answer “no.” The exception would be a construction period delay for which the client is responsible, from which rising prices result. These rising prices cannot be demonstrated through supplier contracts (which are easily manipulated) but through price indices that exist for common building materials. But here too, the contractor has to factor in normal fluctuations. What about Corona and the resulting consequences? In my opinion (and I am not a lawyer), the contractor must include strong price fluctuations and supply bottlenecks in their calculation if the offer was submitted after April 2020, because they had to be expected.

Of course, the question remains: If you don’t sign the contract, will you find someone who will do it cheaper? If there was already a contract (and that’s how I understand it), a price adjustment clause cannot be added retrospectively. Also, the client refusing is not a reason for termination by the contractor.

These are, of course, all my personal impressions, as someone who is professionally both contractor and client (site manager at a general contractor).

Best regards, Jann

Hello everyone,

thank you in advance for the answers!

So far, we have not signed a contract with a final amount. We had one given to us in advance to see what is stated there with the clause.

So far, we have only signed the planning contract and paid the architect.

The margins of the general contractor (GU) in single-family house projects are of such magnitude that price increases can easily consume the entire profit – including the necessary operating profit. It is reasonable, and thus in the interest of all parties involved, that a GU devises risk mitigation measures, as the alternative would be to file for insolvency proceedings proactively upon accepting the contract. I am only opposed to the approach that the GU, in his "distress" (not seeking advice on how to handle this legally properly – although the quality of advice contained in his IHK contribution might already be sufficient), resorts to an unsuitable formulation. Even without accusing him of bad faith, the formulation under discussion here is a black box with explosive potential for the builder.

Then the contractor just has to set the fixed price correspondingly high. As is customary. Fixed prices always include a risk premium to cover eventualities. But the way it is formulated... Huii