Research On Price Adjustment Of Fixed-price Construction Contract Caused By Abnormal Price Fluctuations

From 2007 to 2008, China’s construction market experienced the process of a substantialrise in prices, while the amount of increase in price of building materials was the largest. Thefast change is already far beyond the expectation. Sharp rise in prices has led to increase ofthe construction costs. However, many contractors who had signed a fixed-price contract cannot obtain the employers’compensation for the rise of the price and have to bear huge losseseven bankruptcy. Therefore, China’s construction market in this period witnessed a lot of pricedisputes events. Such events have been seriously affected the smooth progress of the projectand hampered the healthy and stable development of construction market. Therefore, how todeal with adjustment of fixed-price construction contract price caused by abnormal pricefluctuations has become a serious problem.Based on the facts above, the dissertation from the contractor’s perspective made anin-depth analysis on the issues. The aim was to provide reasonable proposal for contractor tobetter response to such problem by probing into the nature of the issue.Firstly, this dissertation attempted to arrive at the conclusion that the fixed-price contractis not completely un-adjustable by exploring the nature of fixed-price contract creatively fromthe perspective of the contract price structure, which provided a theoretical support forsolving the problem.Secondly, by analyzing scholars’studies, the relevant provisions in different provincesand actual cases, the dissertation gave an integrated range of fluctuation of individual factors’price in abnormal price fluctuations. And on this basis, the impact of the abnormal pricefluctuations on the total contract would be defined by further analysis and induction. Thiswork provided the scientific criteria for precisely defining abnormal fluctuation of price.Finally, by summing up past treatment recommendations of scholars on the issue, thethesis emphasized that the use of negotiation to resolve the problem should be preferred. Andif the case can not be negotiated, the contractor can introduce the principle of changedcircumstances to resolve the issue, which will promote a wide range of application of theprinciple of changed circumstances in the settlement of disputes in the purchase price.Based on the study above, the thesis gave a theoretical support and practical proposal tocontractor for handling unusual fluctuations in the condition of the fixed-price contract. Thiswill lay the foundation for solving the problem smoothly.