If a contract has a clause adjusting prices based on a 20% variation in quantities, what type of contract is it?

A contract that includes a clause for adjusting prices based on a percentage variation in quantities typically indicates a Unit Price contract. This type of contract is structured around a set price per unit of work or material. When actual quantities vary from the initial estimates by a specified percentage—in this case, 20%—the contract allows for adjustments in prices to reflect those changes in quantity.

In a Unit Price contract, the contractor is compensated based on the actual quantities of work performed or materials supplied. This setup provides flexibility, allowing the project to adapt to unforeseen changes in scope without significantly affecting the overall financial agreement.

Other contract types mentioned may not have such price adjustment mechanisms associated with quantity variations. For instance, a Lump Sum contract requires a fixed total price for the entire project, regardless of the actual quantities or changes. A Fixed Price contract is similar to a Lump Sum, offering little flexibility for adjustments based on variation. Lastly, a Cost Plus contract typically reimburses costs plus an additional fee, without any unit price adjustments based on quantity variation.

Therefore, the presence of a clause for price adjustment based on quantity variation clearly aligns with the characteristics of a Unit Price contract.