How Change Orders Can Lead to Legal Disputes
Sometimes you just need to make a change, and in the construction field, this is common. Modifications to the contract are often handled through change orders.
A change order is a written agreement that modifies the original construction contract after it has been signed. It usually comes into play when something about the project needs to change, like the scope of work, materials, design, schedule, or cost.
Change orders protect both the contractor and the property owner by making sure adjustments are clearly agreed upon in writing, instead of relying on verbal promises that might cause disputes later.
Common Legal Issues
Here are some common legal issues with change orders in construction:
- Lack of written documentation. Verbal agreements about changes often lead to disputes. If a change order isn’t properly documented and signed, it may be unenforceable.
- Scope creep. Owners sometimes request additional work without realizing it significantly alters the project. Disputes arise when contractors expect extra payment, but owners see it as part of the original contract.
- Cost disputes. Owners may feel the contractor overcharged for the change, while contractors argue that additional labor, materials, or delays justify the price.
- Project delays. Change orders can extend deadlines. If the new timeline isn’t clearly stated, owners might try to hold contractors liable for late completion.
- Authorization issues. Problems occur when someone without proper authority (like a site supervisor instead of the owner) approves a change, and later the owner refuses to pay.
- Failure to follow contract terms. Many construction contracts outline a specific process for handling change orders. If that process isn’t followed, the change order may be challenged in court.
- Payment disputes. Even with a signed change order, some owners delay or refuse payment, forcing contractors to consider legal remedies such as mechanic’s liens.
How to Resolve Disputes
When disagreements arise, the resolution process usually follows these steps:
- Negotiation. The parties talk through the issue, referencing contract documents, the original design/specs, and cost impacts.
- Alternative dispute resolution. If negotiation fails, they might go to mediation or arbitration, which can be quicker and cheaper than lawsuits.
- Litigation. As a last resort, the dispute may be taken to court.
Preventive Strategies
To reduce the chances of disputes arising in the first place, it helps to:
- Clearly define the project scope from the outset, including specifications, deliverables, timelines, and quality standards.
- Set up formal, written procedures for submitting, approving, and documenting change orders.
- Maintain good, consistent communication among all stakeholders (owners, contractors, subcontractors, designers) to catch changes early and align expectations.
- Explicitly follow the terms of the contract, especially those dealing with how change orders must be handled.
Contact Us Today
Change orders can be tricky to navigate. There can be disagreements about time schedules, costs, scope of work, and more.
It’s common for legal issues to creep up when changes are being made to a project. A Florida construction lawyer from Linkhorst Law Firm has the experience to handle your construction-related legal concerns. Call 561-626-8880 or fill out the online form to schedule a consultation today.
Source:
gcpay.com/blog/how-to-manage-change-order-disputes/#:~:text=Change%20orders%2C%20which%20are%20modifications,agreed%20upon%20by%20all%20parties.
