A basic price contract is a type of contract used in the construction industry to establish the total cost of a project. This type of contract is actually a modification of the McQuade v. Stoneham case, an important legal precedent that shapes how construction contracts are created to this day.

McQuade v. Stoneham is a court case dating back to 1895 that established the concept of the “unit price contract.” In this case, a town in Massachusetts hired a contractor to build a sewer system. The contractor submitted an estimate based on the amount of excavation work required and was paid a set price for each unit of excavation. The project ended up costing more than the estimate, however, and the contractor sued the town for the additional expenses.

The court ruled in favor of the contractor, stating that the contract was a “unit price contract” that should have been based on actual quantities rather than estimates. This decision had far-reaching implications for future construction contracts, as it established the principle that contractors should be paid based on the actual amount of work performed rather than on estimates or guesses.

Over time, the unit price contract evolved into the basic price contract, which is still used today in many construction projects. In a basic price contract, the contractor provides a fixed price for the entire project, based on a detailed scope of work and specific materials and equipment to be used. This price is then modified as the project progresses, to account for changes in scope or unexpected costs.

One advantage of the basic price contract is that it is easier to manage than a unit price contract, since the total cost is established up front. This can help avoid disputes and disagreements over changes in scope or cost overruns. However, it does require careful planning and preparation on the part of both the contractor and the client, to ensure that all aspects of the project are fully defined and understood before work begins.

In conclusion, the basic price contract is a modification of the McQuade v. Stoneham case that has had a significant impact on the construction industry. By establishing the principle that contractors should be paid based on actual work performed, rather than estimates or guesses, this case has helped shape how construction contracts are created and managed today. The basic price contract provides a solid framework for managing construction projects, but it requires careful planning and preparation to ensure success.