Most construction contracts contain a clause allowing for change orders; which makes sense as unforeseen circumstances and changes in preferences invariably arise during a construction project. Courts define change orders as written orders to the contractor signed by the owner, architect, and contractor, issued after execution of the contract, authorizing a change in the work or an adjustment in the contract sum or contract time.
There are two approaches that contractors should be aware of regarding change orders: 1) the best case scenario; and the 2) occasionally realistic scenario:
In the best case scenario, any change order notes specifically the overall change in the work from the original scope of the project, has explicit written authorization from a person with explicit, actual authority to give that authorization, and notes the additional claim for compensation in that change order. Change order forms prepared in advance can be useful in obtaining this best case scenario as often as possible.
However, many times, altered work must be performed immediately and oral promises from the owner, contractor, or architect must be relied upon. This should never be the goal, but it is reality. In that situation, it’s important to take steps during and immediately after to put your company in the best position possible to collect on the revised work.
For example, when the change order is being promised, it is important for the contractor to note explicitly that this is outside of the scope of the original project and that additional payments will be required. Afterword, prepare a written notice of the increase in price and what exactly that increase is going to be. Failure to provide written notice as soon as possible may bar recovery on the oral change order.
Most construction contracts require that any change orders be in writing. If a written order was not possible, North Carolina courts have allowed for oral modifications that are supported by evidence of conduct in conformity with that oral modification, even if the contract requires any modifications to be expressly noted in writing.
Written notices and contracts are the key to collecting on changes to the original contract. Get things in writing before work if at all possible but if you can’t make explicitly clear that this is an authorized change from the scope of the project for which additional compensation is expected and provide written notice of that as soon as possible, even if the work is completed and even if the contract bars oral modifications to the contract.
If you are a home owner, general contractor, or subcontractor with issues regarding the inevitable changes that arise in construction jobs, contact Maginnis Law, PLLC to speak with a construction litigation attorney. Maginnis Law, PLLC is a Raleigh civil litigation firm that takes cases in Wake Forest, Cary, Apex, Clayton, Youngsville and the rest of Wake, Johnston, Franklin and Granville counties. Contact the firm at 919.526.0450 to speak with a construction lawyer or submit a request through our contact page.
