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Sub Entitled To Payment Despite Parties' Failure To Agree On Price Adjustment

Monday, November 01, 2010 04:39 am


Contract Changes -- Price Adjustment

Ted Jacob Engineering Group, Inc v. The Ratcliff Architects, 2010 Cal. App. Lexis 1463 (Aug. 23, 2010)

A subcontractor continued to perform on a project despite substantial contract changes -- and in the absence of a newly negotiated contract price. Still, it was entitled to the reasonable value of its work.

The Ratcliff Architects (Ratcliff) hired subcontractor Ted Jacob Engineering Group, Inc. (TJEG) to provide mechanical and electrical engineering services on a County of San Mateo, California project to renovate and expand a hospital. The subcontract contained an "agree-to-agree" provision requiring the parties to negotiate in good faith a mutually agreeable price adjustment in the event of a project change.

When project scope increases occurred, TJEG sought additional payment for additional work. It continued to perform despite the fact that the parties did not settle on a renegotiated fee. In the end, Ratcliff paid some but not all of TJEG's claims. TJEG sued [...]

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