Trent Cotney, Partner, Adams and Reese, LLP
As a contractor, you likely know that a clear, thorough contract is essential to every project. And you also know that when the owner requests extra work or any other revision, a written change order is required. However, there are times when the owner will argue that the change is urgent and request that you proceed without a written order. What are your options?
Most contractors will do just about anything to please the client, so you will likely want to accommodate the change request. Not doing so could jeopardize your relationship with this customer. But it is critical that you protect yourself.
If you do the requested work, you may incur extra expense and labor and the project may take longer than expected. Without a change order, you run the risk that the owner will refuse to pay you for that extra time and cost, despite any verbal assurances. Instead, the owner could point out that there was no written change order and leave you high and dry. Too many times, situations like these result in lawsuit and contractors have no evidence that they were asked to perform extra work.
If your owner insists on a change or extra work but offers excuses for not providing a change order right away, your best strategy could be promissory estoppel. “Estoppel” is a principle that prevents an individual from asserting something contrary to what has been implied by a previous statement or action. For example, in the case of a construction project, estoppel allows you to document a verbal agreement when a change order has not been provided.
Promissory estoppel is a letter that explicitly confirms the request for revised or extra work and that a change order has been promised. It also details the extra time, work and expense involved and it states the expectation that you will be paid for this extra effort. An important note: the estoppel includes the request that if any information in the letter is incorrect, the owner is to notify you in writing. If the owner fails to respond, you have written evidence that implies agreement to the conditions.
When you write a promissory estoppel letter, be sure to include the necessary legal elements. These include the promise of the change order, your reliance on that promise and your expectation of confirmation. Keep in mind that promissory estoppel can sound defensive. That is intended, since you are trying to prevent the owner from denying you what you are owed. If you land in court, this letter will be your best evidence of the owner’s request and your willingness to accommodate.
Consider using this template for your promissory estoppel:
This email confirms that you requested that we perform the following extra work: _____ . The cost
to complete this extra work that is not a part of our original scope is: ____ . In addition, we require
an additional __ days to complete this work and are requesting an extension of time for these days. We
have requested that you provide a written, signed change order, but have yet to receive one. This email
confirms that we rely on your promise to provide us with a written, signed change order for the additional time and cost to perform this work and we are proceeding based on this promised understanding. If any of the above is incorrect, please contact us in writing by no later than ___ .
Be sure to deliver this notice according to the terms of your contract. But you are advised to ensure evidence of its delivery (for example, certified mail or an email read receipt) and retain that evidence.
When you are performing work for a regular client or for a friend, it may be tempting to accommodate revisions or extra work without requiring a change order. However, in this business, remember that having details in writing is critical, no matter who your customer is. So, if getting a change order for an urgent request is not realistic, protect yourself with promissory estoppel.
If you have questions about written change orders or using estoppel, take the time to consult legal counsel. An experienced construction attorney can ensure you secure all the necessary information to protect yourself in any situation.
The information contained in this article is for general educational information only. Trent Cotney is National Construction Team Leader for Adams and Reese, LLP and General Counsel for FRSA. For more information on this subject, please get in touch with the author at trent.cotney@arlaw.com.
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