Thoughts on construction law from Christopher G. Hill, Virginia construction lawyer, LEED AP, mediator, and member of the Virginia Legal Elite in Construction Law

Sometimes You Survive Without Written Change Orders (But I Wouldn’t Recommend It)

Get Construction Change Orders in WritingAs anyone who reads Construction Law Musings on even an irregular basis knows, I am a major advocate of getting everything (especially change orders) in writing. This is particularly true where your construction contract documents require written change orders. In other words, you should make your contracts say what you want them to and then follow the provisions of those contracts. Of course, as soon as I preach from the highest mountain that this is the best and only way to go, the Salem, Virginia Circuit Court allows a claim to go forward that seems to provide an exception to this rule.

In Crawford Construction & General Contractors Inc. v. Kemp, in an all to familiar scenario, the Crawford Construction built a $1.3 million home for the Kemps with all of the oral change orders and adjustments that the homeowners requested throughout construction. The original contract between the parties included a requirement that all change orders be in writing. At the end of the project, and after payment by the owners for some of the changes throughout construction, the builder had a claim for an additional $605,694. Needless to say (and as implied by the title of this post) there were no written change orders documenting the changes comprising this claim.

The parties made the typical arguments. The contractor tried to rely on the contract and the additional oral changes in scope to recover its money. The homeowners argued (among other things that are outlined in the linked opinion) that the contract required written change orders, no such writings exist, therefore we get $605,794 worth of construction for free. When faced with these arguments the Virginia court essentially said that both sides were wrong but that the claim could move forward.

In coming to this conclusion, the Court stated

It is clear from counsels’ pleadings and argument that both parties mutually ignored the change order provision of the contract. Owners routinely requested additional and changed work done on their new house and the contractor routinely complied with their request.

From this admonishment to both parties about following the terms of the contract, the Court continued its analysis. Essentially, the Court held that Virginia law allows parties to change the terms of a contract by word and action, but that each change constituted its own oral contract so neither party could rely on the original contract terms. For the homeowners who ignored the written change order provisions and paid for some of the changes, it meant that they could not rely on the written change order provision to avoid all payment. For the contractor which ignored those same provisions, it could not rely on the contract terms to set the value of its claim.

While the Court allowed the contractor’s construction change order claim to move forward, the contractor (and the homeowners for that matter) is now in an uncomfortable and uncertain position. The parties, by ignoring the plain language of their construction contract, left it to the judge to determine the content of their agreement. Because neither party followed the rules that they set at the outset of the construction project, they are both now at the mercy of the court to decide their fate.

In short (if it isn’t too late at this point), the parties construction attorneys are now left to argue in a vacuum and from circumstances instead of from a contract that a Virginia Court would enforce to the letter. I see cases like these on a daily basis, and not all of them are salvageable. In any event (and despite this recent opinion) written change orders in compliance with your construction documents is the best way to have certainty and to make sure that you have the best chance of recovery as a contractor should you find yourself in a construction dispute.

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Sometimes You Survive Without Written Change Orders (But I Wouldn't Recommend It)
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14 Responses to Sometimes You Survive Without Written Change Orders (But I Wouldn’t Recommend It)

  1. Under Australian law change orders (typically called variations) are mandatory. After years of litigation it was decided, get it in writing or we will not support your claim. Sadly we still get too busy nearly every week to get the paperwork in place before the work starts.T Email has helped and often I will fire off a quick email to cover the topic broadly, eg Chris i will get plumber to fit bigger hot water tommorrow estimating a cost around $ 1200. Its not correct but it is a paper trail. Thanks for an interesting post

  2. Thanks for checking in Marcus. E-mail does help and in the age of smart phones, should always be used when possible.

  3. […] The next step that a contractor needs to take, particularly in this economy, is to discuss the progress of the project with all involved from the owner to the architect and the subcontractors. Communication of this information outside of the bare contract documents can only smooth the process. An owner that understands the process will be less troublesome than one that doesn’t. Having a written change order provision in the contract is a must. Following that provision after explaining it to the owner will make your life as a builder much less complicated. […]

  4. […] Sometimes You Survive Without Written Change Orders (But I Wouldn’t Recommend It) […]

  5. […] have discussed issues that may arise in the context of a residential construction project. Because most homeowners are not […]

  6. […] have discussed issues that may arise in the context of a residential construction project. Because most homeowners are not […]

  7. […] 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 […]

  8. […] 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 […]

  9. […] Musings for “Dragas” for more on this issue). Also, with the economy the way it is, sticking to the letter of your contract documents and getting written change orders is even more imperative. I encourage you to peruse the various […]

  10. […] Musings for “Dragas” for more on this issue). Also, with the economy the way it is, sticking to the letter of your contract documents and getting written change orders is even more imperative. I encourage you to peruse the various […]

  11. Sometimes Contractors Collect Without a License (Crawford Construction Revisited | Construction Law Musings- Richmond, VA) says:

    […] so look no farther than Crawford Construction & General Contractors Inc. v. Kemp. This case came up here at Musings once before relating to the contractor’s failure to obtain written change orders from the defendant […]

  12. Construction Lawyers Can Be Part of the Solution | Construction Law Musings- Richmond, VA says:

    […] (not those on the ground managing the projects, contracts and payment streams) cause the delays, undocumented changes, economic issues with subcontractors, and the other myriad issues that at times plague the […]

  13. […] The next step that a contractor needs to take, particularly in this economy, is to discuss the progress of the project with all involved from the owner to the architect and the subcontractors. Communication of this information outside of the bare contract documents can only smooth the process. An owner that understands the process will be less troublesome than one that doesn’t. Having a written change order provision in the contract is a must. Following that provision after explaining it to the owner will make your life as a builder much less complicated. […]

  14. […] Another example of potential confusion is in the change order process. While a contractor can survive (and possibly collect) on unwritten change orders, under most circumstances, statutory or contractual processes must be followed to the […]

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