Todd M. Heffner | Smith Currie | August 20, 2018
Most construction contracts require that any changes to the work be made formally, in writing, via a change order, work directive, or similar written document. Frequently, however, changes to the work or extra work are communicated orally by the architect, engineer, or owner’s representative, instead of in writing. What is the contractor to do in such a situation? The best option is follow the provisions of the contract and demand a written change order before performing changed work. Unfortunately, the realities of construction sometimes make it impossible to get the changes in the proper format in a timely manner. Savvy contractors will maintain schedule and produce written documentation of the change in lieu of a formal change order or directive. But many contractors will simply proceed with the changed work, relying on the owner, architect, or engineer to do the right thing and stand by their oral instructions.
So what happens if changes are communicated orally and a dispute over the changes arises? The general trend is for courts to allow a contractor to recover for the extra work that was performed. But there are still certain jurisdictions and situations in which contractual requirements for changes to be in writing will be strictly enforced. Even in jurisdictions where contractors have been able to recover, it is an expensive and time consuming challenge to convince a court to ignore the plain language of a contract.
Relying on the good will of the owner, architect, or engineer is rarely a good idea, even for contractors who have a long working relationship. If the work must proceed without formal authorization, it should be possible to obtain informal documentation. For example, the contractor can send an email to whoever is directing the work requesting clarification of what is to be done. The email chain will provide written evidence that the contractor did not proceed as a volunteer or consider the changed work to be in the original scope.
Even if the owner, architect, or engineer refuses to respond to an email request for clarification, the contractor can still create written documentation of the oral directive to perform extra work. This can be done initially by sending a long email documenting exactly what was directed and why it constitutes a change to the work. Any such email should be followed by a letter sent via certified mail. Both email and letter should give the owner, architect, or engineer a limited time to disagree, e.g., “We will proceed with this work in x days unless you direct otherwise.”
If the party directing the work is unwilling to send something informal in lieu of whatever the contract requires, the contractor must proceed very cautiously. Why the reluctance to put the changes in writing? Whatever the reason, this is not an enviable situation to be placed in, as most contracts will also impose penalties if work is delayed or stopped. Along with producing its own written documentation, the contractor can point out that it was the owner who put the requirement for written documentation in the contract, while also noting that it is mutually beneficial to have a common understanding of the required work at the time the work is to be performed. Any misunderstanding is far easier to address contemporaneously rather than months or years after the work is complete. This issue also affects subcontractors. Subcontractors who rely on particular general contractors for repeat work will especially benefit from a conciliatory approach. Many subcontractors simply cannot afford to bring a lawsuit because there was misunderstanding about a verbal change to the work.
Another contract clause to be aware of in this context is what can generically be called an “anti-waiver” clause. An anti-waiver clause is one that claims to invalidate the waiver of any contract provision, unless the waiver is expressly in writing. In other words, an anti-waiver clause could require written confirmation that the verbal change at issue does not need to be provided per the terms of the contract. Generally speaking, anti-waiver clauses are no more effective than the changes clauses. The legal principles that would allow a contractor to overcome not following a written change requirement are the same legal principles that would allow it to overcome the anti-waiver clause. That said, it is always better to follow the terms of the contract to the greatest extent possible. If this is impossible—document, document, document.