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Contract Changes

Contract Changes. Construction contracts are unique because owner can make unilateral changes to contract (with consideration). Contract Changes. Changes in scope require change orders Changes in time require delay or acceleration claims Most claims are handled in change orders

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Contract Changes

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  1. Contract Changes Construction contracts are unique because owner can make unilateral changes to contract (with consideration)

  2. Contract Changes • Changes in scope require change orders • Changes in time require delay or acceleration claims • Most claims are handled in change orders • Change orders must be in writing and confirmed • Contractor entitled to OHP

  3. Contract Changes • Document the changes in scope or time • Estimate costs • Estimate time • Submit request for change order per contract • Get approval (dual or three-way signature) • Handouts of standard forms

  4. Contract Changes • Field changes are used when there is no time for prior approval • Explain and document (notification clause) • Architect issues change directive, then contractor submits claim (court or arbitrator) • Constructive change for extra work caused by defective plans and specs or owner misrepresentation (MSP airport) • Contractor not responsible for synthesis and coordination of plans and specs

  5. Contract Changes • Scope changes are different than constructive changes- owner adds work • If scope change becomes excessive, original contract can be voided • Contractor entitled to payment after new contract is agreed to • Each party must give consideration (prevents holdings tactics

  6. Contract Changes • “evidence of writing” required for certain transactions • Sale of goods over $500 (UCC) • Scope of work exceeds one year • Involves purchase, lease or mortgage of property • Promises to pay debt of another • Agency contracts • Scope exceeds life of the entity • Agreements on consideration of marriage

  7. Contract Changes • Owners entitled to change the contract • Suppliers entitled to consideration, but “pre-existing duty” takes precedence • Promissory estoppel • Party has given reason to believe payment is due • Other party relied on that promise in conduct • Other party performs work and incurs costs

  8. Contract Changes • Waiver- any party can agree to relinquish a right or ignore contract clauses • Delays • Inexcusable- contractor pays costs • Excusable- each party absorbs costs- • contract delays are usually spelled out in contract • Law delays are granted by court or statute • Compensatory- owner pays contractor for additional costs

  9. Contract Changes • Acceleration claims • Speed up construction • Increase rate of work • Refusal to grant extension is same as acceleration claim • Liquidated damages and no damages for delay clauses are very difficult to enforce (exculpatory) • Notice and documentation are critical • Delays within schedule float are not qualified (conveying system at MSP airport)

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