It is rare that a construction contract remains unchanged from start to finish. Contractors have come to expect that they’ll be asked to implement change orders and extras after work starts. With that being the case, understanding both the distinction between the two and the procedure to formalize each is important.
Change or extra?
A change is a modification to an item that is already agreed upon under the contract, whether it is an increase or decrease, an alteration or exclusion. An extra, on the other hand, is material or work not addressed under the original contract. Too often, contractors use the words “extra” and “change” interchangeably and incorrectly.
Get change orders and extras in writing
Most contracts address how a change and an extra should be treated, and most make clear that they need to be in writing to be enforceable. That being said, this requirement may be waived based on the parties’ conduct or a verbal understanding. Just saying something has to be in writing will not necessarily make it so.
The parties’ course of conduct—how they deal with each other—will have an effect on this requirement. Verbal approval of changes by an owner, especially on a regular basis during the progress of the job, may well constitute a waiver of the “in writing” requirement.
Still, as in everything else related to construction, having everything in writing is absolutely the way to go. Reducing an extra or a change order to writing—with the parties’ signatures acknowledging the change or extra—eliminates the potential for confusion and reduces any reliance on faulty memories.
Identify in writing the specific people who are authorized to make changes or extras and who can bind a contracting party. When drafting a change order or extra, it is sensible to include the date, an adequate description of the work to be performed, the price (or, at a minimum, a method for determining the price), a description of how long the work is estimated to take, and any exceptions or objections as to what is being resolved by the change order or extra.
Because it is almost guaranteed that a change order or extra will become part of your construction project, be prepared. Get each in writing.
Alexander Barthet is principal of The Barthet Firm, a 10-lawyer construction law practice that has been serving South Florida’s construction industry for more than 20 years. More at www.thelienzone.com.
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