Is it a Bird? Is it a Rule? It’s a Cardinal Change Order!
Change orders. Everyone’s got ‘em! But, what’s the difference between a change order and a cardinal change order? Read on to find out!
Boring Ol’ Change Orders
A change order is a change to the original contract. “I need more material” is a common trigger for a change order. Some construction projects encounter hundreds of change orders – verbal and written (written, of course, is preferred, though surprisingly difficult to obtain).
Generally, a “boring ol’ change order” isn’t for terribly significant changes or changes that would change the entire scope of a project. As I mentioned above, a change order is likely a request for additional material because an estimation was wrong, or the material sent needs altering.
I should mention, although it may not be a significant change it may be substantial enough to change your last furnishing date.
I know…“Can open. Worms everywhere.”
Cardinal Change Orders
When you think of cardinal change orders, think specifically about the word cardinal. Not the red bird, but rather the idea that something is essential, fundamental or vital (thank you Merriam-Webster).
Joseph R. Young with SmithCurrie provides an excellent definition in his article Changes and Extra Work – Is There a Limit?
“A “cardinal change” is a change or the culmination of changes ordered by the owner that are beyond the scope of the contract and that may constitute a material breach of contract.”
Young goes on to explain that these cardinal changes are “beyond the reasonable expectation of the original undertaking and have significant planning, scheduling, and cost implications…”
How Do I Know the Difference?
Construction contracts and, of course, mechanic’s lien statutes are never black and white. Within the text there are inferences, assumptions and text is always open to interpretation. So, how do you know if the change order(s) is a cardinal change order?
In true construction-related fashion, the answer is: it depends.
Young reinforces this answer:
“There is no bright line rule about what could be considered a cardinal change or what was reasonably contemplated by the parties in the original contract. Unless the contract expressly limits the owner’s right to issue changes, reliance on the cardinal change doctrine is a risky basis to refuse additional or changed work. Clear contract language addressing the scope and magnitude of permissible changes is the most reliable source of addressing significant changes.”
There is a chance that a change may be drastic enough to be an obvious cardinal change, such as changing plans for the construction of a 1200 sq ft single family residence to a 200,000 sq ft commercial shopping center. But, the likelihood of something that obvious is slim at best.
Best defense? Young recommends including verbiage within the contract.
“The contract should address some limitations on the extent of changes or place restrictions on material changes in the use of the project or the contractor’s work. The contract should also address when the contractor may refuse to perform changed or additional work. By clearly defining the limitations of the changes clause, parties can minimize the disputes about ambiguities over the legal concept of “cardinal changes”, and the parties can eliminate the risk of an unnecessary dispute as to whether there has been a cardinal change. The best course of action for all parties is to incorporate the cardinal change concept into the contract and follow the terms of the contract in managing and addressing changes.”
My advice? If you are drafting a contract, have a contract lawyer review the document. If you are in the middle of a dispute, consult an attorney – don’t try and navigate the possible breach of contract claims on your own.
NCS Blog & Upcoming Webinars!
What do Starbucks, Jimi Hendrix, Bing Crosby, Mt. Rainier, Boeing, Microsoft & the NCS Blog have in common? The state of Washington! Check out this week’s post to learn more about securing lien and bond claim rights in Washington.
- March 19: Implementing a Lien/Bond Claim Program – Overcoming Obstacles
- April 2: UCC Remedies Upon Debtor’s Default
- April 16: Understanding Lien Waivers
- April 30: UCCs Offer Security for Many Business Transactions
See more upcoming events on our Events Page!