Three years back, your organization awarded a fixed price contract to a reputable local contractor to construct a new airport terminal in the city. A few days back, you received a change request from the contractor requesting to adjust the contract’s price. The contractor is claiming that as a result of the recent national recession, the prices of raw materials have gone up and he cannot complete the rest of the project at the contract price. Is the contactor’s request legitimate?

A. Yes, you cannot penalize the contactor for price escalations due to force majeure.

B. * Yes, unless there is no Economic Price Adjustment provision in the contract.

C. No, the price of the contract is fixed and cannot be changed.

D. No, the price hike due to recession must be adjusted against the contractor’s profit.