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The pandemic has caused the price of construction materials to increase at historic levels. For example, in June 2021, the price of softwood lumber was up 125.3% from twelve months prior, and the price of soft plywood products was up 207% over that same period. This put contractors with fixed price contracts in a difficult position of either keeping their commitment at a significant loss or facing a breach of contract claim. A fixed price contract or stipulated sum contract in construction is where parties set a total established price upfront for the entire project. Fixed price contracts accounted for 80% of residential construction contracts in 2020.

This post was originally published on the Cardozo Journal of Conflict Resolution website on January 9, 2022. The original post can accessed via the Archived Link button above.

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