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Understanding change orders

Like many of the commercial contractors in Sacramento, you know full well that the circumstances surrounding a job can change at any moment. Many in your position come to us here at Trainor Fairbrook soliciting advice on how to handle requesting a change order or asking how such proposals may affect them. If you or a contracted client are considering a change order, it is important to first understand all of the elements of such a modification before agreeing to it. A lack of such knowledge could place you and your company in an unfavorable position.

The most important thing to understand about change orders is that they must represent a mutual consensus between parties. That means that a client cannot force you into contractual amendments that you do not agree with. To enact such an order, it must be presented in much the same way that initial contract negotiations are carried out, namely with the presentation an offer, a mutual acceptance and an exchange of consideration. When defining consideration for a change order, both you or your client must either agree to do something not currently required under the existing contractual parameters, or to omit that are otherwise permitted. If only you are being asked to offer consideration, then such aa change order may not be legally enforceable.

All change orders should be presented and documented in writing, as only the signature of each side is recognized as acceptance. Agencies such as the Associated General Contractors of America offer forms for such orders, which prompt the detailing of all pertinent information, such as:

  •          The changes made to the original contractual terms
  •          The resulting payment modifications
  •          The time adjustments such changes will warrant

You can discover more information about structuring change orders by continuing to explore our site. 

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