Contractors Performing Work Without Signed Change Orders at Risk
Kegler Brown Construction Newsletter September 1, 2004
In 1997, the Ohio Supreme Court in the Foster Wheeler case stated that if a contractor performed extra work without a written change order, he could not recover for that extra work, unless the change order provisions were waived by the owner or employer. The Court ignored the fact that the engineer consultant observed and acquiesced in the extra work and denied recovery, setting an extremely dangerous precedent for Ohio contractors and subcontractors.
Relying heavily upon the Foster Wheeler decision, the Seventh District Court of Appeals, has defeated the claim of another contractor seeking payment for additional quantities of work indisputably provided to the project. The Court, in Seneca Valley, Inc. v. Village of Caldwell (2004) 156 Ohio App. 3d, dealt with a situation where the specified quantity of asphalt restoration in the contract (10 square yards) was only enough to resurface one driveway and yet the contractor ultimately restored about 1422 square yards. This discrepancy came up pre-bid, and the engineer told the contractor that the contract would be taken care of via unit prices and he should not be concerned.
The contractor provided the additional work in plain view of the village's "observer" who noted the quantities daily. The contractor billed for the extra work on a unit price basis and was ultimately denied recovery because he didn't have a signed written change order.
The Court found that the contract was a fixed (not unit) price contract, that it required change orders in writing, and that this clause was not waived either by the engineer's pre-bid "clarification" or the daily notation of quantities by the village's observer.
Contractors are strongly advised to refuse to perform any additional work unless directed to do so in writing. If an owner complains about this refusal "holding up the job" the contractor should point out that it is the owner's contract language that created the dilemma and still refuse to proceed unless he receives a statement in writing that the written change order clause is being waived.
Cases like this demonstrate the days when "a handshake was one's bond" are long past in the commercial construction industry in Ohio, and illustrate the perils that await those who do not document extras in writing before performing the work.