Builders and Contractors Exchange
Weekly Bulletin: 19 dec 2006
The Importance of updating written contracts to include later verbal changes
By: Katherine Murray
The responsibilities of the parties in most construction projects are written out in contracts between the owner, contractor and various subcontractors. This is always a good idea so everyone knows what to expect for payment, warranties, who is performing what work, and when, where, and how it is to be completed. Many construction contracts include paragraphs that state that the contract terms cannot be changed unless the change is made in writing. Unfortunately, this paragraph alone cannot save you from having your contract changed through a later oral revision or by how the parties actually end up dealing with each other.
It is not unusual that as a construction project progresses the owner, contractor, and subcontractors find that changes need to be made regarding the scope of work, payment terms, warranties, deadlines, etc. Pressed for time, the details are worked out later with oral agreements being made on the job or over the phone.
It is possible that these later changes may change the terms of a written contract even though the contract specifically states that changes can only be made in writing. For example, if the contract stated that the owner was to select and provide the contractor with materials but in a later conversation it was decided that it would be easier for the contractor to do it, the contractor may have just assumed liability for the materials selected. These later oral agreements can also change other very important issues including how a contractor is paid for his work, the termination provisions of the contract, and so on.
Of course, it is always a good idea that the owner, contractor, and subcontractors be flexible in their dealings with one another. If they weren’t, many projects would never be completed. But the contractor and subcontractors should always keep in mind that if a contract is being performed differently than how it was written or if there have been later verbal changes, the written contract should be changed accordingly. In addition, if it looks like the terms of the written contract just aren’t functionally fit for the project, a new contract should be written that accurately sets the boundaries of the relationship. While a bit time-consuming on the front end, these precautions will save a lot of time and money in the long run.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.