Legal Question in Construction Law in California

Re: legal profit & overhead charges

Generally, a contractor can charge whatever he or she wants (with very limited exceptions), but the market will dictate what he or she can actually collect. In other words, he could say he's going to charge you $10,000 for a disposal replacement, and if you agree to pay it, there is nothing illegal about that. Conversely, s/he won't be in business long if he or she charges more than what the market will bear. Along the same lines, you are free to (a) negotiate the profit and overhead on plan checks out of the deal, or (b) find a different contractor. If you are at the state of negotiating a contract, then it is a matter of whether or not you agree to his request and document it in the final construction contract. If you have a contract, it should have a firm price in it for all work to be done which, if it included this item, then you must pay it. If this is a change order, you need to look back at the contract to see if it provides that he may charge profit & overhead on such matters. Most well-constructed contracts I have seen provide that kind of flexibility for the contractor.

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