Notice, Notice, Notice: Contract Change Orders and Claims

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Larry Lubka of Hunt Ortmann Law Group discusses the importance of notice when change orders occur in contstruction contracting.

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Notice, Notice, Notice: Contract Change Orders and Claims

  1. 1. AGC 2011 FALL CONFERENCE NOTICE, NOTICE, NOTICE LARRY LUBKA
  2. 2. • Your typical contact has a couple of clauses affecting change orders: • The first one usually states: CONTRACTOR SHALL GIVE X DAYS WRITTEN NOTICE OF ANY CHANGE TO THE CONTRACT. • The second one usually states: ANY CHANGE TO THIS CONTRACT MUST BE IN A WRITING SIGNED BY BOTH PARTIES.
  3. 3. • Curiously, many contractors seem to miss those two clauses. • Over the past fifty years courts have allowed any number of exceptions to those rules. • Example 1: The owner caused the problem, so it did not need notice of the problem. • Example 2: The owner knew of the problem and failed to disclose it.
  4. 4. • As to the written change order, courts have held that both parties can orally agree to change the contract terms and will enforce the agreement, particularly when the oral agreement is fully performed (oral agreement to build a new wall and the wall was built).
  5. 5. • On October 6, 2011 the Fifth Appellate District issued an opinion in the case of: • GREG OPINSKI CONSTRUCTION, INC. v. CITY OF OAKDALE • Award of damages against Contractor for lateness and defects. • The tide is turning back to strict contract construction.
  6. 6. • The Opinski contract provided: • Completion time and contract price could only be changed by a written change order. • The change request could be accomplished in two ways. • Changes could be done by mutual agreement. • Or …
  7. 7. • Changes could be “referred initially to Engineer in writing with a request for a formal decision …” The party making the claim was required to give written notice of the claim to the engineer and to the other party “promptly (but in no event later than thirty days) after the occurrence of the event giving rise thereto….”
  8. 8. • Data supporting the claim were required to be submitted within sixty days after such occurrence, unless the engineer allowed additional time.
  9. 9. • Civil Code §1511 does not apply – obstruction of performance by owner. • “It made no difference whether Opinski’s timely performance was possible or impossible under the circumstances.
  10. 10. • “If the contractor wished to claim it needed an extension of time because of delays caused by the city, the contractor was required to obtain a written change order by mutual consent or submit a claim in writing requesting a formal decision by the engineer. It did neither.”
  11. 11. • If you have any questions regarding this presentation, contact Larry Lubka: • By Phone: 626-440-5200 • By Email: lubka@huntortmann.com
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