In a building contract between a contractor and a principal a contract price is usually agreed upon. It often happens that the principal wishes all kinds of changes or additions to the work during the execution. This is then extra work. But are the costs of this extra work for the account of the contractor or the principal?
The costs of additional work shall be borne by the client
If changes or additions to the work result in a price increase, the contractor may charge the costs of this additional work if:
- he has warned the principal about the price increase resulting from the additional work commissioned; or
- the principal himself should have understood that the additional work would lead to a price increase.
Example of the need to increase prices
For example, a client should understand that the price for the work will be higher if he asks the contractor to install gold taps everywhere instead of standard taps.
The contractor does not have to give such a warning in writing about a price increase as a result of additional work. Nor does the contractor have to provide insight into the extent of the price increase or the (concrete) additional costs to be expected (Supreme Court 1 July 2022). The latter applies both to the case where the contractor has warned about the price increase and to the case where the client himself should have understood that the work would turn out to be more expensive as a result of the additional work.
In other words: if the client has been warned by the contractor about the higher costs resulting from the extra work, or if the client should have understood that the extra work would involve higher costs, the bill for the extra work is for the client. In such a case the contractor does not have to indicate how much more expensive the work will be as a result of the extra work.
Client must ask for the costs of additional work
If the contractor has warned about the higher costs resulting from the extra work, or if the principal should have understood the necessity of the price increase himself, the principal must ask the contractor about the extent of the price increase (read: the costs of the extra work). Then the principal can decide whether or not he wants to carry out the additional work.
The principal must pay the contractor a reasonable price for the additional work
If the contractor has informed the principal in time of the price increase resulting from the extra work (without mentioning a concrete amount) or if the principal himself should have understood that the extra work would lead to a price increase, the principal must pay a reasonable price for the extra work. If a recommended price has been determined, this recommended price may not be exceeded by more than 10%.
Important for contractor and client to properly record agreements on the price of additional work
In order to avoid a discussion about the price of the extra work it is important that the agreements between the parties are properly recorded. Although a contractor is not obliged to warn in writing of a price increase as a result of the extra work, nor to indicate in concrete terms what the costs of the extra work will be, it is wise to inform the client of this in writing (or by e-mail) prior to the work.
Want to know more about contracting work?
Would you like to know more about the rights, obligations and liabilities of contractors and principals in contracting work? Read more here or contact Yvonne Jansen at jansen@lvh-advocaten.nl. She regularly advises and litigates about contracting work.
