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Contractual price adjustment due to an massive material price increase

Due to the massive price increases of construction materials, which are among others due to the Covid-19 pandemic, demands for price adjustments for materials (during the construction phase) have often resulted in contract disputes.

The contractor’s claim to price adjustment can arise under Section 2 (5) sentence 1 VOB/B.

According to this provision, a new price shall be agreed if the price basis of a contractually agreed service is changed due to changes in the construction project or other instructions of the client.

It should be noted at this point that, as a rule, the new price agreement must be made prior to execution. Such an agreement is possible by accepting the supplementary offer (“Nachtragsangebot”). If such an agreement does not take place prior to execution, the agreement can be replaced by means of price determination by the court then called upon.

In the VOB/B, the determination of the amount of the claim is not precisely specified. Up to now, the adjustment of the calculation was basically carried out by applying a ” pre-calculated price update – vorkalkulatorische Preisfortschreibung”. This case law was changed by the BGH in 2019 with two fundamental decisions (here, however, with regard to Section 2 (3) VOB/B).

Accordingly, many higher regional courts have also switched to setting the new price for supplements (Section 2 (5) VOB/B) on the basis of the additional costs actually required plus appropriate surcharges.

Consequently, developers are usually faced with difficult decisions as to how they should deal with such claims from their contractors.

Here, of course, it helps if one has secured oneself contractually before the start of the construction project. If this is not the case, then it is a matter of skillful negotiation during the construction phase. It often helps to analyze the price adjustment demands in detail in order to ward off attempts by contractors to push through higher prices with sweeping references to “world market prices”. Here, the entire range of instruments of the VOB/B can be used in negotiations in order to complete the construction project on time and without major price increases and without having to resort to the courts.

We will be happy to advise you!