[CLC-Discussion] Thank you for the guidance - allowances

[Erum Kistemaker]

Good afternoon,

I was wondering if anyone has dealt with a situation similar to the one that I am having with regards to allowances in a contract for construction of a residence.  My clients entered into a contract with a general contractor.  The relevant portion of the contract that addresses allowances reads as follows:


ALLOWANCES:  Set forth within the Specifications may be allowances for certain items.  If the cost for the items selected by the Buyer exceed the allowance for such item, Buyer shall be responsible to pay the difference at the time of selection.  The warranties provided herein, to the extent applicable, shall be in force and effect only for allowance items provided by subcontractors or suppliers approved by Contractor.  If the Buyer uses a non-approved subcontractor or supplier the Contractor shall have no responsibility for such items.

As you can see, all references to allowances refer to "items," which I interpret to mean materials only.  Now, within only weeks of the start of construction, the general contractor is asking my clients to pay for overages over the allowances for certain items (plumbing, flooring, doors, etc.) due to additional labor costs.  In essence, he is arguing that the term allowances in the contract refers to both materials and labor for installation of said materials.  In my research, I have found that if labor is to be included as part of the allowances then it should be specifically set forth as such in the contract and, if not, labor is simply a part of the contract price.

I was wondering if anyone has dealt with this situation or is aware of any authority that provides more guidance on this issue.  Any input is greatly appreciated.

Best regards,


Erum S. Kistemaker, Esquire

Kistemaker Business Law Group
Sent by my I Phone - please excuse any errors.
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