Contract Changes

1
Contract Changes

• Construction contracts are unique because owner
  can make unilateral changes to contract (with
  consideration)

2
Contract Changes

• Changes in scope require change orders
• Changes in time require delay or acceleration
  claims
• Most claims are handled in change orders
• Change orders must be in writing and confirmed
• Contractor entitled to OHP

3
Contract Changes

• Document the changes in scope or time
• Estimate costs
• Estimate time
• Submit request for change order per contract
• Get approval (dual or three-way signature)
• Handouts of standard forms

4
Contract Changes

• Field changes are used when there is no time for
  prior approval
• Explain and document (notification clause)
• Architect issues change directive, then
  contractor submits claim (court or arbitrator)
• Constructive change for extra work caused by
  defective plans and specs or owner
  misrepresentation (MSP airport)
• Contractor not responsible for synthesis and
  coordination of plans and specs

5
Contract Changes

• Scope changes are different than constructive
  changes- owner adds work
• If scope change becomes excessive, original
  contract can be voided
• Contractor entitled to payment after new contract
  is agreed to
• Each party must give consideration (prevents
  holdings tactics

6
Contract Changes

• evidence of writing required for certain
  transactions
• Sale of goods over 500 (UCC)
• Scope of work exceeds one year
• Involves purchase, lease or mortgage of property
• Promises to pay debt of another
• Agency contracts
• Scope exceeds life of the entity
• Agreements on consideration of marriage

7
Contract Changes

• Owners entitled to change the contract
• Suppliers entitled to consideration, but
  pre-existing duty takes precedence
• Promissory estoppel
• Party has given reason to believe payment is due
• Other party relied on that promise in conduct
• Other party performs work and incurs costs

8
Contract Changes

• Waiver- any party can agree to relinquish a right
  or ignore contract clauses
• Delays
• Inexcusable- contractor pays costs
• Excusable- each party absorbs costs-
• contract delays are usually spelled out in
  contract
• Law delays are granted by court or statute
• Compensatory- owner pays contractor for
  additional costs

9
Contract Changes

• Acceleration claims
• Speed up construction
• Increase rate of work
• Refusal to grant extension is same as
  acceleration claim
• Liquidated damages and no damages for delay
  clauses are very difficult to enforce
  (exculpatory)
• Notice and documentation are critical
• Delays within schedule float are not qualified
  (conveying system at MSP airport)