Waiver of Written Change Order Requirement
A frequent topic of dispute in litigation involving construction projects is whether a subcontractor is entitled to payment for work it performs outside its contractual scope of work—often referred to as “extra work” or “change order work”—without obtaining a signed written change order to perform the work. The same issue often arises in the context of change orders and directives issued from the owner to the general contractor.
In a typical scenario, the general contractor orally directs a subcontractor to perform work outside of the subcontractor’s scope and promises that a written change order will shortly follow. The subcontractor, conscientious to keep the project moving, complies with the oral directive and completes the extra work without obtaining a signed written change order. Its subsequent payment requisition is then denied for failure to obtain the signed change order. Is the subcontractor legally entitled to be paid for the work that the general contractor directed it to perform, even without a signed change order?
Courts have held that oral directions to perform extra work, or the general course of conduct between the parties may modify or eliminate contract provisions that require written authorization.
Technical contract requirements for written change orders will not always be enforced, if the subcontractors are directed to perform the work and do perform the work in a course of conduct without objection from the general contractor. That said, every effort should still be made to secure signed written change orders where they are required by the contract, in order to avoid unnecessary, disruptive and costly disputes. By the same token, general contractors and owners who do not consent to change order work should clearly object in writing to performance of the extra work. If they do not do so, and the subcontractor proceeds with the extra work, the general contractor or owner may be found to have “authorized” the work by their silence and therefore be responsible for paying the subcontractor for such work.
Also, equitable principles such as unjust enrichment and estoppel may apply.