This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the Owner should terminate the contract under the first sentence of Article 37 of the General Conditions of the Contract, he shall reimburse the Contractor for the balance of all payments made by him under Article 5, plus a fee computed upon the cost of the work to date at the rate of percentage named in Article 4 hereof, or if the Contractor's fee be stated as a fixed sum, the Owner shall pay the Contractor, such an amount as will increase the payments on account of his fee to a sum which bears the same ratio to the said fixed sum as the cost of the work at the time of termination bears to a reasonable estimated cost of the work completed, and the Owner shall also pay to the Contractor fair compensation, either by purchase or rental, at the election of the Owner, for any equipment retained. In case of such termination of the contract the Owner shall further assume and become liable for all obligations, commitments and unliquidated claims that the Contractor may have theretofore, in good faith, undertaken or incurred in connection with said work and the Contractor shall, as a condition of receiving the payments mentioned in this Article, execute and deliver all such' papers and take all such steps, including the legal assignment of his contractual rights, as the Owner may require for the purpose of fully vesting in him the rights and benefits of the Contractor under such obligations or commitments.
A contract of this sort is said to be what the law would imply if no price were fixed. Charles Elmer & Sons v. Kelly, 263 Fed. 687.
Under charter provisions which authorize public officers to make contracts lor work or materials, and for work to be performed, a public corporation may make a contract on a "cost plus fee" basis. Crowe v. Boyle, -Cal. -, 193 Pac. 111.
In the absence of a special provision therefor a contractor can not receive a percentage based on his investment in his plant. Charles Elmer & Sons v. Kelly, 263 Fed. 687.
Nor for tools used in construction. Shaw v. G. B. Beaumont Co., 88 N. J. Eq. 333, 2 A. L. R. 122, 102 Atl. 151.
Nor for depreciation. Savannah A. & N. Ry. v. Oliver, 174 Fed. 140. [Per curiam.]
Nor for overhead, office expenses, etc. Charles Elmer & Sons v. Kelly, 263 Fed. 687; Shaw v. G. B. Beaumont Co., 88 N. J. Eq. 333, 2 A. L. R. 122, 102 Atl. 151. Contra: Hoggson Bros. v. Spiekerman, 161 N. Y. Supp. 930, 175 App. Div. 144.
Nor for the cost of correcting defects, etc. Charles Elmer & Sons v. Kelly, 263 Fed. 687; Hoggson Bros. v. Spiekerman, 161 N. Y. Supp. 930, 175 App. Div. 144.
Nor for the profits of sub-contractors. Grafton Hotel Co. v. Walsh, 228 Fed. 5.
Nor for unreasonable or unnecessary expenditures. Westendorf v. Dininny, 92 N. Y. Supp. 858; Title Guarantee & Trust Co. v. Pam, 182 N. Y. Supp. 824, 192 App. I Iv. 26.8.
For the crime of false pretenses by padding pay-rolls, see State v. Cook, - Wash. -, 194 Pac. 401.
The contractor is entitled to additional expense due to changes in plans made by the owner. Schafer v. Lee, - Okla. -. 166 Pac. 94..
For a contract providing for no charge for superintendence for construction in excess of a fixed price, see Payne v. Cunningham, 175 Cal. 166, 165 Pac, 531.
See references under Sec. 3821.