Construction contracts based inflation-rising material costs

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Reference no: EM13855457

Pre-existing Duty: Melissa Faraj owns a lot and wants to build a house according to a particular set of plans and specifications. She solicits bids from building contractors and receives three bids: one from Carlton for $160,000, one from Feldberg for $158,000, and one from Siegel for $153,000. She accepts Siegel's bid. One month, after beginning construction of the house, Siegel contacts Faraj and tells her that because of inflation and a recent price hike for materials, he will not finish the house unless Faraj agrees to pay an extra $13,000. Faraj reluctantly agrees to pay the additional sum.

a) Discuss whether or not construction companies can raise the price of completing construction contracts based on inflation and rising material costs and if Faraj is required to pay the additional $13,000 once the work is completed.

Reference no: EM13855457

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