Issue 3 (17) 2012

Nikitin Increase in Price of Work per a Conractor’s Agreement

Increase in Price of Work per a Conractor’s Agreement

A.V. Nikitin

Ural State Law Academy

21, Komsomolskaya st., Ekaterinburg, 620137

E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

This article discusses the possible reasons for the increase in the price of the contractor’s agreement, among which are the causes of an objective nature. These reasons arise due to circumstances beyond the control of the parties to the contract. Cases of objective exceeded estimates, depending on its causes can be classified into two groups: 1) due to the need for additional works; 2) due to the increased value of contractor-provided materials and equipment, as well as third party services provided by him. The Civil Code differentiates the options named, given that the firm or rough estimates.

The need for the differentiation of legal regulation is not entirely clear. Exceedances of the estimates above are objective, therefore, is not associated with any omissions on the part of the contractor. Meanwhile, the differentiation leads to quite significant differences in the rights and obligations of the parties to the agreement. In case of disagreement with the above rough estimates due to the need for additional works customer is entitled to withdraw from the contract, the contractor may require payment of the price for executed piece of work. On the right of the contractor in such a situation, to withdraw from the contract if the customer does not agree to increase the estimate said nothing in the law. On the contrary, when the price of work due to increasing cost of materials etc. the law says that when the customer does not agree to such excess, the contractor has the right to demand termination of the agreement in court. The law says nothing about the right of the customer to refuse the contract, nor on its obligation to pay the price for your part of the job. Not mentioned and that the contractor shall promptly notify the customer on the occurrence of the circumstances entailing increased estimates.

It appears that due to the similarity of their situations to unify the law for both solid and the approximate prices. As a solution to this situation might be proposed the following approach. Because of the increasing in the price in the first place, the contractor should know reasonably with the duty to inform the customer about the need to exceed estimates (the firm – in all cases, the approximate-with substantial excess). Disagreement on such excess is regarded as a form of non-performance of the contract.

Keywords: contractor’s agreement; price (cost estimate); exceeding estimates; notice to the customer

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