LEGAL MATTERS
Change Orders — Use Them, Understand Them, or Pay the Price — Part 1 “The Only Constant in Life Is Change.”— Greek Philosopher Heraclitus
A Jeffrey W. King,
Jones Walker, LLP
Outside General Counsel for the WFCA
Jeffrey King has
more than 35 years’
experience in complex
litigation with a focus on contracts, employment, construction, antitrust, intellectual property and health care. He
serves as legal counsel for WFCA and other
trade associations, and is a LEED Accredited
Professional. For more
information, contact him at (561) 278-0035 or
jeffw@jkingesq.com.
certainty in selling flooring is that something will change. It may be unanticipated site conditions, the unavailability of products, a customer changing their mind and selecting a different flooring, an issue with another subcontractor, unforeseen delay, or other events. When changes are needed, it is key to document that the parties have agree on the changes, the price, and impact on the schedule. Equally important is to keep a record of these agreed upon changes. The most common process for documenting changes is to have written “change orders.” Most standard form construction contracts have a “changes in the work” clause that establishes procedures for revising a contractor's scope of work. For instance, in the American Institute of Architects form AIA–A201 2017 change orders are addressed in Article 7, while in the Associated General Contractors of America’s ConsensusDocs 200, the change provisions are found in Article 8. Custom contracts often state there can be no oral modification of the contract and only signed, written change orders will be binding on the parties. Whether signing a subcontract or selling directly to the consumer, flooring retailers and contractors should include a change order clause in their contracts to minimize future disputes. Change orders represent some of the most contentious disputes between contractors, subcontractors, and property owners. Part I of this article will address the basics of change orders. Part II will review the issues raised when change orders are challenged..
Change In Work Clauses A change order is a written amendment to an existing contract that alters the work, the amount of payment and/or the contract time. Change orders are by their nature for work and materials not included in the existing contract. Some will be obvious, such as changing the flooring products to be installed, or adding additional areas to replace or install flooring. Others changes may be less obvious to the buyer, including construction site conditions, the presence of mold or asbestos, or the need for new subflooring. Yet others may need to be specified in the contract, such as unanticipated material cost increases or additional expenses for delays. The biggest problems occur when there is disagreement about whether the request constitutes a change from the original agreement or justifies additional payment. In order to avoid these types of issues, it is important to make sure that the scope of work is well defined in the original contract and what items are not covered, such as unforeseen site issues. Flooring retailers and contractors should consider the following:
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