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Extra Work in Construction Contracts

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We often find a provision similar to the following in the contract documents.

"No alterations shall be made in the work, nor shall any charge be made by contractor for extra work, without the prior written approval of such by owner. If contractor claims that any instruction from the owner involves extra costs under the contract, or will delay the completion date of the work, contractor shall give owner immediate written notice of such and shall first obtain written approval by owner of such additional charge and new completion date prior to commencing such work."

The court in Nat Harrison Associates, Inc. v. Gulf States Utilities Company reviewed just such a clause in a construction contract and found that "the general rule in Louisiana favors the validity of contract provisions requiring notice of extra work." The court also quoted the following point of law:

"No claims for extra work or materials shall be allowed unless made in writing . . . and when the contract so provides, and there is no written order for such extras, no recovery can be had for them in the absence of a waiver of that stipulation."

In the Nat Harrison case, the court observed that the obvious purpose of notice provisions (such as the one quoted) is the protection of the owner against mistaken or fraudulent charges under the contract. "These clauses in construction contracts make the written order a condition precedent to an enforceable right to payment for extra work."

The court went on to find, however, that a contractor may recover damages even without fulfillment of the written notice requirement, where an owner makes changes which are outside of the scope of the contract and amount to a breach of the contract. The court also identified four situations where a requirement for written notice may be deemed waived by the owner. Those include:

(1) when the extra work was necessary and had not been foreseen;

(2) when the changes were of such magnitude that they could not be supposed to have been made without the knowledge of the owners;

(3) when the owner was aware of the additional work and made no objection to it; and

(4) when there was a subsequent verbal agreement authorizing the work.

The best rule is to comply with the contract provisions and work with a change order in hand. The court may make the contractor wish he had despite the inequity of the situation.

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