Increasingly, contractors are using email to communicate with owners and subcontractors about change orders. This practice can work, but a legal issue arises when the court compares what the parties did with what the contract said.
For example, let’s assume that a contract says that changes are only to be made if approved in writing in advance. Assume also that in a few instances, changes were made based on oral agreement and email confirmation, and the cost for the changes was billed and paid. If a dispute arises over authorization or payment for a subsequent change, the court could uphold the change, ruling that, based on prior behavior, both parties abandoned the contract provision.
However, many factors affect the court’s judgment, including the size and number of changes, so a ruling favorable to the contractor is not guaranteed. The prudent approach is to avoid drafting a contract provision that you know likely will not be followed, and instead draft a procedure that you can comply with. For example, if it’s common to discuss and confirm changes via email, include that in your contract. But the email should always fully document the changes as to the scope of work, the cost, and the schedule.
What if you send a confirmation email but the owner fails to respond. Is that consent? How you write the confirmation email could make the difference. Avoid an email message that says something like, “Please confirm that …” because it requires a response to determine consent. Instead use declarative language: “This confirms our conversation in which we agreed. ...”
Do you need a signed document? Technically, no, because the legal test is consent: Was there a meeting of the minds? That said, while we have had success proving a meeting of the minds via email messages, it’s best to have a signature, whether on paper or using something like DocuSign. For most people— and most judges—it is one of the highest standards of evidence of a meeting of the minds.
Read more about change-order best practices
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Alexander E. Barthet is a Board Certified Construction Attorney. He manages The Barthet Firm, a nine lawyer construction law firm in Miami, and maintains thelienzone.com construction law blog. [email protected]
This article is for informational purposes only and is not legal advice. Consult your own lawyer, as laws may have changed or be interpreted differently depending on the facts of your specific situation.