Have you ever been pressured to do extras on a contract without agreeing to a change in contract price or time? Has anyone ever told you something to the effect of, ‘don’t worry,’ ‘we’ll figure it out later,’ and ‘just stick to the schedule’? Few projects are completed without any changes to the scope of work. Some projects end up with dozens or even hundreds of changes from the original scope. Changes can be required for any number of different reasons, including change in preferences, unforeseen circumstances and incomplete design development. Changes can also arise from parties acting in bad faith. Whatever the reason or circumstance, changes are an inevitable part of construction. If not managed properly, changes to the original scope of work can sink a contractor, owner or even a whole project. Here’s what you need to know. From a legal standpoint, a change order is an amendment to the building contract. For all standard fixed price and scope contracts, the contractor is only legally required to do the work stipulated in the contract (including drawings, schedule, etc.). Any material deviation in the scope of work or schedule is technically outside of the contract. Without agreement, material changes to the contract cannot be legally forced. Done properly, an amendment to the building contract (i.e., a change order) should be in writing; include a description of the change in scope of work; change in price; change in time; and be signed by all affected parties. Now you may think, well that is easy to say for the average ivory-tower lawyer—who likely could be convinced of the existence of left-handed hammers. But that is not always the real world where, for one reason or another, formal change orders have not been signed, the change management provisions of the contract have been ignored and where nothing has been squarely addressed—even verbally. What then? There is good news. In appropriate circumstances, courts have determined that parties higher in the contractual chain cannot escape having to pay for legitimate extras—even where there has been a complete failure to follow the change procedures in the contract. In certain circumstances, where a contractor can show that an owner knew or ought to have known that the contractor was doing extra work and implicitly agreed to the extra work, the owner must pay the contractor a reasonable amount for this extra work. This principle also applies to sub-contracts. Every situation turns on its own unique circumstances. Not all instances of un-documented extra work are going to give rise to compensation. Wherever possible, it is always better to follow contractual provisions and properly document extras. But if you think you have been short- changed on change orders, consider reaching out to one of our construction lawyers at Holloway Thliveris LLP. We might be able to help you. Check us out at htlaw.ca or call any one of our six lawyers: Are You Getting Short-Changed on Change Orders? Ivan Holloway is a construction lawyer at Holloway Thliveris LLP Ivan Holloway 204-289-1521 Stephan Thliveris 204-289-1522 Scott Cannon 204-289-1524 Jared Wheeler 204-410-7075 Evan Podaima 204-410-7076 Derek Novosel 204-694-1105
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