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Problem with Fixed Bid Contract

We signed a fix bid contract with our contractor and just found out one of the line items bid out to a sub was faked. We were charged 20,000 + O&P and we found out the contractor invoiced and was paid only 7K. Instead of crediting the 14K back to us the contractor faked the lein waiver and charged us the entire amount.
Since we are paying 28% O&P on the 20K there is no reason to hide this 14K in the sub contractor's line item Do we have recourse not to pay this? Or can the general contractor demand the full payment? The lein waiver was faked for the higher amount.

Re: Problem with Fixed Bid Contract

best advice is to contact a lawyer who specalizes in contract law. only someone versed in contract law and able to look at the actual documents could say. some lawyers may be able to review the contract and tell you if it is something that they are willing to handle, and that will tell you if you have anything.

A. Spruce
Re: Problem with Fixed Bid Contract

At the very least, it sounds like this contractor needs to be reported to the licensing board or governing body.

Re: Problem with Fixed Bid Contract

Both are good advice.

Re: Problem with Fixed Bid Contract

It is not unlawful for a general contractor to charge you $20K for something that only cost him $7K. Often, a bid is submitted after receiving either 1 or no bids from sub-contractors on a specific line item. If the general contractor is awarded the contract, he may (at his own discretion) decide to "shop around" for a better price from other sub-contractors. Since he is on a fixed bid, he is in no way obligated to pass any savings along to the customer.

On the other hand, if a sub-contractor ultimately charges more than the general contractor had allowed for a line item, he (the general contractor) also cannot ask you for more money.

General contracting isn't an exact science. There's a lot of give and take. Lumber, copper wire, conduit & plumbing pipe are all commodities, with almost daily price fluctuations. These all affect the contractor's profit (or loss). If prices rise, the contractor loses. If prices fall, he wins. If 2 x 4's go on sale at Home Depot and the contractor can save a couple of hundred dollars off of his materials estimate, he is in no way obligated to pass the savings on to you, the customer.

Having said that, falsifying lien wavers is unlawful, though I don't know if you would be entitled to collect any monetary damages. If you feel that you have been deceived and want some sort of satisfaction, consult with an attorney, as previously suggested. He will be able to tell you if it is worth pursuing or not.

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