What should I put for total contract amount on the prelim as a material supplier with multiple deliveries?

7 days ago

I work in California as a material supplier and we have multiple deliveries for each job. We don’t usually know the total contract amount at the start of the job because we don’t know how many deliveries there will be. What should we put as the “estimated total contract amount” on the preliminary notice?

Managing Partner Gibbs Giden LLP

The law requires that you have a “rational basis” for your estimated total contract amount.  The appellate case that us construction law geeks always refer to for guidance in these matters (Rental Equipment v. McDaniel) also provides that a claimant cannot make up the estimated value “out of whole cloth.”  It is safe to say that the law does not require you to be entirely accurate (thus, the requirement of an “estimated” value).  I do not know the nature of your business but often times there are ways to safely come up with an estimate based on prior transactions with the same client, the nature of the particular project at issue, and/or prior transactions with similar clients.  Also, it may be appropriate in some situations to ask your customer to give its best estimate (in an email or other writing you can save) for what they will need for a particular project and if you have no better information, use that as your estimated value since that is your customer’s best estimate of what is needed.  I hope this is helpful.

—-CN

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