Many construction contracts and subcontracts, both residential and commercial, provide that any addition or deletion from the scope of work described in the contract must be documented by a written change order. The purpose of these written change order requirements is obvious: to avoid disputes down the road over the existence of, extent of, or price and time effects of changes to the work.
In the press to get a project completed, contractors and their customers sometimes ignore such contract language, agreeing on a change but failing to get a written change order signed. Does that failure doom additional compensation (or credit) for an agreed upon change to the work?
A few years back I blogged (#65) on the difficulty of unjust enrichment recovery for verbal change orders in the face of contractual requirements for written change orders. But there are other approaches that can save the day.
The most common scenario for getting around a contract provision for written change orders arises from an implied waiver of the requirement. An example is D.M. Holden, Inc. v. Contractor’s Crane Service, Inc., 121 N.H. 831, 835 (1981), which affirmed an award of damages for extra work despite a contract provisions that “no payment for ‘extras’ would be made unless the work was approved in advance and in writing,” finding that the provision had been disregarded by the parties and impliedly waived. Where I see this most often is in time crunch settings, with the need for quick action forgiving a lapse in the paperwork. See Worcester Air Conditioning Co., Inc. v. Commercial Union Ins. Co., 439 N.E.2d 845, 848 (Mass.App. 1982) (“The judge’s finding that it was the practice of the subcontractor and plaintiff to proceed without a written change order where something had to be done quickly justifies the conclusion that they impliedly waived the requirement of a written change order.”).
When a contractor’s or subcontractor’s extra work is specifically approved by the owner or contractor, courts tend to allow recovery despite written change order requirements. Ekco Enterprises, Inc. v. Remi Fortin Construction, Inc., 118 N.H. 37, 41 (1978), is an example: “Although the contract did specify that extra work was to be requested and agreed to in writing, the master correctly ruled that this requirement did not bar recovery for extras, improvements and substitutions made with Ekco’s full knowledge and approval.”
The issue of waiver arises only when a party is suing under the contract. But there are other theories of recovery that can be resorted to, such as quantum meruit. (See Blog #119) R. J. Berke & Co., Inc. v. J. P. Griffin, Inc., 116 N.H. 760, 765 (1976), is apt here: “Whatever its merits, the issue of waiver is irrelevant insofar as Berke’s recovery is not on the contract but in quantum meruit. In the absence of some explicit understanding between the parties that quantum meruit for extras would be barred . . . they were properly included in the calculation of the gross benefit conferred.”
As these cases make clear, written change order requirements in construction contracts will not always bar recovery in the absence of the writing. 1 Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner and O’Connor on Construction Law § 4:39 (2010) notes: “The principle of strict enforcement of ‘written order’ requirements is now a pale shadow of its former existence. Since the mid-20th century, the judiciary has recognized the fundamental distinction between authorized changes and written changes, and between the authorization itself and evidence of authorization, and generally has enforced authorized orders in whatever form given.”
That being said, the original purpose behind written change orders still holds. Proving a waiver of the requirement, proving the express direction to perform concededly extra work, and proving a basis for quantum meruit recovery are far more difficult tasks than simply pointing to a signature on a written change order. If your contract requires such a writing, it is foolish to ignore it and take the risk of being able to prove a basis for forgiving the lapse.
In the press to get a project completed, contractors and their customers sometimes ignore such contract language, agreeing on a change but failing to get a written change order signed. Does that failure doom additional compensation (or credit) for an agreed upon change to the work?
A few years back I blogged (#65) on the difficulty of unjust enrichment recovery for verbal change orders in the face of contractual requirements for written change orders. But there are other approaches that can save the day.
The most common scenario for getting around a contract provision for written change orders arises from an implied waiver of the requirement. An example is D.M. Holden, Inc. v. Contractor’s Crane Service, Inc., 121 N.H. 831, 835 (1981), which affirmed an award of damages for extra work despite a contract provisions that “no payment for ‘extras’ would be made unless the work was approved in advance and in writing,” finding that the provision had been disregarded by the parties and impliedly waived. Where I see this most often is in time crunch settings, with the need for quick action forgiving a lapse in the paperwork. See Worcester Air Conditioning Co., Inc. v. Commercial Union Ins. Co., 439 N.E.2d 845, 848 (Mass.App. 1982) (“The judge’s finding that it was the practice of the subcontractor and plaintiff to proceed without a written change order where something had to be done quickly justifies the conclusion that they impliedly waived the requirement of a written change order.”).
When a contractor’s or subcontractor’s extra work is specifically approved by the owner or contractor, courts tend to allow recovery despite written change order requirements. Ekco Enterprises, Inc. v. Remi Fortin Construction, Inc., 118 N.H. 37, 41 (1978), is an example: “Although the contract did specify that extra work was to be requested and agreed to in writing, the master correctly ruled that this requirement did not bar recovery for extras, improvements and substitutions made with Ekco’s full knowledge and approval.”
The issue of waiver arises only when a party is suing under the contract. But there are other theories of recovery that can be resorted to, such as quantum meruit. (See Blog #119) R. J. Berke & Co., Inc. v. J. P. Griffin, Inc., 116 N.H. 760, 765 (1976), is apt here: “Whatever its merits, the issue of waiver is irrelevant insofar as Berke’s recovery is not on the contract but in quantum meruit. In the absence of some explicit understanding between the parties that quantum meruit for extras would be barred . . . they were properly included in the calculation of the gross benefit conferred.”
As these cases make clear, written change order requirements in construction contracts will not always bar recovery in the absence of the writing. 1 Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner and O’Connor on Construction Law § 4:39 (2010) notes: “The principle of strict enforcement of ‘written order’ requirements is now a pale shadow of its former existence. Since the mid-20th century, the judiciary has recognized the fundamental distinction between authorized changes and written changes, and between the authorization itself and evidence of authorization, and generally has enforced authorized orders in whatever form given.”
That being said, the original purpose behind written change orders still holds. Proving a waiver of the requirement, proving the express direction to perform concededly extra work, and proving a basis for quantum meruit recovery are far more difficult tasks than simply pointing to a signature on a written change order. If your contract requires such a writing, it is foolish to ignore it and take the risk of being able to prove a basis for forgiving the lapse.
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