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Construction Contract: Extras and Changes.

Construction contrasts frequently contain provisions allowing the owner to make changes in the work or an adjustment in contract time or price.

The changes clause gives the owner the right to change the contract work or terms unilaterally without breaching the contract and to be notified of potential claims by the contractor. The clause enables the owner to order any changes "within the general scope" of the contract, to correct errors in plans, to amend the construction schedule, to meet changing circumstances, and to take advantage of new or improved construction methods and techniques.

Every changes clause seeks to define and limit those who are authorized to order changes. Clauses frequently state that the change must be signed by the owner, the architect or engineer. Generally the changes clauses defining and limiting authority to order changes are enforceable. Courts nevertheless may find authority to exist on legal theories such as ambiguity interpreted by course of dealing and ratification.

Recovery for changes usually is permitted only when such extra work is performed pursuant to a written change order signed by an authorized person, but where the contractor appears justified in receiving an equitable adjustment in the contract price for extra work that had not been specifically authorized in writing, courts have been known to ignore the contract's requirement of a written change order.

Where strong evidence exists that someone in authority issues change orders orally, courts may accept subsequent oral change orders. Circumstances which play a part in a court's finding of waiver of the written requirement include the following:

1. The owner's knowledge that the contractor considered the work a compensable extra;

2. The owner's insistence that the work be performed;

3. Any pattern of conduct whereby "extras" were performed and paid for in the absence of written change orders; and

4. The owner's assurance that a written order was unnecessary.

Generally, there is no presumption that an owner has waived the condition requiring a written order for extra work. The burden of proving the waiver is upon the party relying upon the waiver. Evidence of waiver must be clear and convincing.

The requirements for a written change order may also be avoided by showing that the party's conduct, demonstrated a modification of the contract with regard to the written change order requirement. A waiver of the requirement may be found where the parties' had repeatedly disregarded the requirement. Where one has not insisted on a written change order, the writing requirement may be waived as to a disputed change order.

The Rule: Get it in writing, or get a good lawyer.
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Publication:Arkansas Business
Article Type:Brief Article
Geographic Code:1U7AR
Date:Mar 13, 2000
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