I have discussed the necessity of following your well drafted contract documents and obtaining written change orders on numerous occasions here at Construction Law Musings. Recently, the U. S. District Court for the Eastern District of Virginia in Richmond, VA gave a strong reminder regarding these two business practices for contractors.
In Carolina Conduit Systems Inc. v. MasTec N.A. Inc. the Court considered an all too familiar situation. In Carolina Conduit, the general contractor told the sub contractor “not to worry” about payment for excess flowable fill provided by the subcontractor. Based upon this representation, Carolina Conduit performed the additional work and then attempted to get MasTec to pay for that work. As you may predict, a dispute arose regarding this issue and Carolina Conduit sued for (among other expenses) the additional expense it incurred based upon the unforeseen need to provide excess flowable fill.
MasTec then moved for summary judgment to have the case dismissed based on two points. The first was that the “additional work” was actually part of the original scope of work and therefore was not extra work for which its subcontractor could claim additional payment. The second was that even if the work was extra work, the contract between it and Carolina Conduit required written change orders.
While taking it as fact that the work regarding the flowable fill was extra work, the Court agreed with the general contractor and stated that merely being told “not to worry” about excess fill does not relieve a subcontractor from following the contract documents. Additionally, course of dealing or even a major change in the specifications do not relieve a subcontractor of its responsibility to follow the contractual procedure. The Court then dismissed the claims regarding the flowable fill.
The takeaway? Always follow the terms of your construction contracts. Even in the heat of an ongoing construction project, at the very least obtain written confirmation by e-mail or fax of the terms of any change and follow up with the formal change order. Failure to do so can cost a contractor or subcontractor substantial amounts of money.
Also, make sure that you carefully review the contracts that you sign, preferably with the help of an experienced construction attorney. Having your legal counsel review a contract before you start work can only help you know the expectations going into the project and hopefully keep you out of the situation in which Carolina Conduit found itself.
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