{"id":900907,"date":"2023-03-01T15:47:01","date_gmt":"2023-03-01T22:47:01","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=900907"},"modified":"2023-03-01T15:47:08","modified_gmt":"2023-03-01T22:47:08","slug":"extra-work-contract-payment-claims","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/extra-work-contract-payment-claims\/","title":{"rendered":"In the Contract or Out of the Contract? Payment Claims for Extra Work in Oregon"},"content":{"rendered":"\n<p>D. Gary Christensen | <a href=\"https:\/\/www.millernash.com\/industry-news\/in-the-contract-or-out-of-the-contract-payment-claims-for-extra-work-in-oregon\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Miller Nash<\/a><\/p>\n\n\n\n<p>When a contractor performs <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/extra-work-claim-waived\/\" target=\"_blank\" rel=\"noreferrer noopener\">\u201cextra\u201d work<\/a>\u2014more than its construction contract contemplates\u2014how can it be paid? A common question, indeed. And one that usually is easily answered with a change order or extra work directive. But what if the change order is rejected\u2014after the work has been performed, of course\u2014under the terms of the contract? Can the contractor claim payment anyway on the basis that the extra work was performed\u00a0<em>outside\u00a0<\/em>the scope of the contract?<\/p>\n\n\n\n<p>Oregon has answered, \u201cno.\u201d An opinion issued on February 15, 2023, addressed a construction project where the excavator subcontractor removed 3,290 cubic yards of fill under a construction subcontract that contemplated\u2014at most\u20141,500. The general contractor later rejected the subcontractor\u2019s change order for the additional quantity of work as being too late under the contract\u2019s terms. So, the subcontractor claimed that the unexpected overrun was work performed&nbsp;<em>outside<\/em>&nbsp;of the contract, arguing that the unanticipated excess work was not governed by the contract\u2014especially after the change order was rejected\u2014and that not paying for the services performed would constitute unjust enrichment to the prime contractor.<\/p>\n\n\n\n<p>Not so, says the Court of Appeals of Oregon, holding that an express contract will govern disputes about any conduct that is within the contract\u2019s subject matter (see:&nbsp;<em><a href=\"https:\/\/law.justia.com\/cases\/oregon\/court-of-appeals\/2023\/a177168.html\">Kizer Excavating Co. v. Stout Building Contractors<\/a><\/em>, 324 Or App 211 (2023))<em>.&nbsp;<\/em>The law will not permit a party to a contract to put it aside when events arise that\u2014even though unexpected, additional, or different\u2014are within the subject matter of the contract. In&nbsp;<em>Kizer<\/em>, that meant that the subcontractor\u2019s remedy for payment was found only in the subcontract and, as a result, payment was unavailable because of the tardy, rejected change order. (Of interest, the question about the validity of the change order\u2019s rejection was not part of the case, at least on appeal.)<\/p>\n\n\n\n<p>So what? Several important lessons come out of the&nbsp;<em>Kizer<\/em>&nbsp;decision.<\/p>\n\n\n\n<p><strong>First,<\/strong>&nbsp;contractors of any tier must ensure that the general contractor or owner has approved\u2014in writing\u2014the proposed changes or extra work&nbsp;<em>before&nbsp;<\/em>that work. Doing extra or additional work on a handshake (or email)\u2014or not following the contract\u2019s terms\u2014throws away the contractor\u2019s leverage to be paid later.<\/p>\n\n\n\n<p><strong>Second,<\/strong>&nbsp;be sure that the construction contract (1) is valid and enforceable, (2) specifically identifies the contractor\u2019s scope of work, and (3) expressly excludes\u2014or qualifies\u2014other or additional work that might arise. In this case, both parties admitted that the subcontract was valid and enforceable and covered the removal of fill. In other cases, however, the extra or additional work might be excluded from the scope of the work in the contract, or the contract may not be valid, leaving an argument that the extra work is outside the contract. Careful drafting of construction contracts with qualified legal counsel cannot be overstated.<\/p>\n\n\n\n<p><strong>Third,<\/strong>&nbsp;a contractor\u2019s construction lien rights might be limited by this decision. No lien was at issue in&nbsp;<em>Kizer<\/em>, but its reasoning could be applicable to limit claims for the value of work performed under the lien laws. Do not rely on a lien remedy to solve this problem for you.<\/p>\n\n\n\n<p><strong>Finally,&nbsp;<\/strong>don\u2019t despair. Your claim may not fit within the Court of Appeals\u2019 decision. In this case, the parties made several concessions at trial that one might not make in a different case. Check with your construction attorney about whether your claim might be enforceable under other theories of recovery.<\/p>\n\n\n\n<p>Note that this decision is still fresh and may yet be appealed to the Oregon Supreme Court. And please don\u2019t rely on this article as legal advice. Always consult with a competent construction lawyer for advice for your situation.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>D. Gary Christensen | Miller Nash When a contractor performs \u201cextra\u201d work\u2014more than its construction contract contemplates\u2014how can it be paid? A common question, indeed. And one that usually is easily answered with a change order or extra work directive. But what if the change order is rejected\u2014after the work has been performed, of course\u2014under&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/extra-work-contract-payment-claims\/\">Continue reading <span class=\"screen-reader-text\">In the Contract or Out of the Contract? Payment Claims for Extra Work in Oregon<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,11199],"class_list":["post-900907","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-extra-work-payment-dispute","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>In the Contract or Out of the Contract? 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