| In
the past I wrote various articles about how you must get
your agreements signed before you do any work. This included
the contract, any change orders, purchase orders, etc. I
also instructed everyone to review the terms of the contract
so that they are clear and unambiguous. It is imperative
that you understand the terms and conditions of the
agreement as clearly as you understand your bid.
Recently, a decision was
rendered by the Appellate Division, Second Department, which
could have lasting effects on the construction industry in
New York. In the public sector, a change order will not be
paid unless there is a written and authorized change order
executed by the parties.
In the private sector,
however, a change order is valid, even if it is oral and the
contract directs written C.O. 's, as long as it was
authorized and the work performed was outside of the scope
of the contract. The rationale for this rule is that the
parties may waive any portion of the contract and as long as
the work performed is outside of the scope of the contract,
the owner should be obligated to pay for it.
Story
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Recently,
however, the Court found in a private sector project that
where a contract executed between the parties expressly
precludes oral extras or change orders not documented in
writing and the owner disputes the extras or change orders,
the claim may be dismissed. This is the first time that I
have come across a decision which dismissed oral change
orders where the contract directed that they be in writing.
Ramifications of this decision could be severe.
Most
contractors are told in the field to do certain work which
is outside of the scope of the contract and the paperwork
will follow later on. Many times the paperwork does not
follow and you are forced to invoice the change order
without having a signed change order. According to this
decision, you perform the work at your own peril. While it
may cause your job to be performed at a slower pace, it
appears that the Courts are now directing that you receive a
signed written change order pursuant to the terms of the
agreement before you commence with your work. Never let your
lien time run out!!
For a free
copy of a pamphlet pertaining to mechanic's liens and
payment bond claims, kindly contact me or the Association.
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