Set price or an estimate?
After the fact, it always turns out that private homeowners think that they had agreed on a set price. But when this is not exactly clear and put into writing, there is almost always room for interpretation.
When it comes to setting a fixed price, the law allows two possibilities (Art. 373 and 374 Swiss Code of Obligations): the first, a definitive handover, is more or less a fixed price insofar as both parties have agreed on a very specific price. The contractor is then obliged to perform the services or deliver the work at exactly this price, independent of whether his own expenses turn out to be larger or smaller than expected. Only clear, reasonable grounds which according to the law could not be anticipated then justify a higher price.
Variable price based on time and expense
In the case where the price was not at all or only approximately agreed in advance, the second possibility comes into play (Art. 374 CO). Under these conditions, the contractor can set the price based on the value of his work and his expenses, in other words, based on hours on the job and cost of materials. This rule is in effect if the agreement was simply vague.
An example of such an estimated price: «The laying down of prefinished parquet flooring at a price between 8,000 and 12,000 Swiss francs.» This corresponds to the legal practice whereby a cost overrun of 10 percent must be accepted when working with an estimated determination of the price.
Unambiguous agreements pay off
If someone awarding a contract, however, wants to establish a set price or an all-inclusive price, he must formulate this in written agreements clearly and in detail. Such a passage might have the following wording: «Agreed is a set price, and no extra costs whatsoever will be accepted, in particular not the standard allowable discrepancy of 10 % of the bid.»