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Construction Contract Change Order Clause Upheld

by | Jun 1, 2012 | Construction Contracts |

Contractors faced with the common dilemma of accelerating performance at additional cost versus facing liquidated damages due to late delivery must adhere to their construction contract’s change order clause according to the Michigan Court of Appeals.

In Field Construction, Inc. v Midfield Concession Enterprises, Inc., the plaintiff-contractor completed its scope of work on time and received payment on its undisputed contract balances, but sued for additional costs incurred as a result of alleged extraneous events that impacted its performance. Both the lower and appellate court denied the contractor’s claims because no written change orders to document the increased scope and price were obtained. More importantly, it does not appear the contractor provided written notice or documented its claims during the project to protect its rights. Courts are typically prone to enforce unambiguous contract provisions as written, including change order clauses. Not only was the contractor denied recovery for its additional costs, but the other side was awarded attorney fees as the prevailing party under the terms of the contract.

The case also reinforces the proposition that equitable relief cannot be had in the face of an express contract between the same parties covering the same subject matter. The contractor’s right to recover based on these facts were limited to the construction contract it bargained; recover under quantum meruit was denied.

To properly preserve claims, contractors must document project conditions that impact their performance and timely request change orders to maximize potential recovery.