Legal Question in Construction Law in California

Contractor Inflating prices

Is it legal for a General Contractor to inflate the prices on a home improvement contract for the portions of work he subcontracted out?

Our releases from the subs reflect a much lesser amount than what we actually paid per the contract price.

After later seeing the subcontract between the GC and the subcontractor he hired, it is clear our GC has been ''price inflating'' & putting lots of extra money in his pocket. Is this legal???


Asked on 1/26/09, 5:37 pm

3 Answers from Attorneys

Benjamin Berger Berger-Harrison, A Professional Corporation

Re: Contractor Inflating prices

It depends on what the terms of the deal were between you and the GC. If he promised to pass along his actual cost (which is rare), then he probably cannot legally pad the numbers.

Do you have a written contract? If so, I'll take a look at no charge.

Good luck,

Ben

Read more
Answered on 1/26/09, 5:39 pm
Carl Starrett Law Offices of Carl H. Starrett II

Re: Contractor Inflating prices

There are many types of construction contracts, so it really depends on what the contract say. A general contractor usually subs out most of the work and manages the project. The contract might be something called a "cost plus a fee contract", which allows the contractor to mark up work of subcontractors by an agreed upon percentage. You may also have a fixed fee contract, which would mean that the contractor's actual cost would not be any concern of yours.

I suggest you contact a local construction law firm and have them review the contract to better answer your question.

Read more
Answered on 1/26/09, 6:04 pm
Terry A. Nelson Nelson & Lawless

Re: Contractor Inflating prices

It appears from your question that you never understood that is how contractors make their money. They ALWAYS mark up subcontractor's bills. How else did you think they earned a living for supervising your project?

Read more
Answered on 1/26/09, 6:23 pm


Related Questions & Answers

More Construction Law questions and answers in California