Can Contract Time Can Increased By Oral Agreement?

Construction contracts very frequently contain provisions that require all changes orders to be approved in writing. In Louisiana, however, oral modifications to written contracts are allowed despite such provisions. Rhodes Steel Buildings, Inc. v. Walker Const. Co., 813 So.2d 1171.

At the trial level in Lantech Construction Co. v. Speed, the court’s ruling reflected this jurisprudence, requiring a property owner to pay for work performed by the contractor in six unwritten change orders. However, the trial court also required the contract or to pay $31k in liquidated damages for failing to finish the project on time.

The contractor’s argument was simple: If the written contract’s sum can be modified orally, so too can the written contract’s time – and that the unsigned change orders requested a change in the contract time & sum.

Going through the line of Louisiana cases regarding oral changes to written construction contracts, the appeals court agreed with the contractor.

…[T]he law is clear that written contracts may be modified by oral contracts and the conduct of the parties, even when the written contract contains a provision that change orders must be in writing. Modification of a written agreement can be presumed by silence, inaction, or implication. The party who asserts that an obligation has been modified must prove by a preponderance of the evidence facts or acts giving rise to the modification. It is a question of fact, therefore, as to whether there were oral agreements that modified the written contract. Oral modifications alleged to be in excess of $500 must be proved by at least one “credible witness” and “other corroborating circumstances.” Only general corroboration is required. Parol evidence is admissible for this purpose.

The court reversed the award of liquidated damages against the contractor, ruling that after application of the contract time extensions the project was not delivered late.

This blog post was originally published on Wolfe Law Group’s topic-specific Louisiana Construction Law Blog.

Celebrating Our 5th Year Blogging – Simplified Look and Free Construction Resources

Happy Birthday to Wolfe Law Group’s construction law blog, the Construction Law Monitor.    To celebrate, we’ve made things a lot better on our site.

We’re now in our 5th year of blogging about construction law issues that matter to contractors, subcontractors and suppliers across the country…and all of our postings and tagging has transformed the Monitor into a leading construction law resource.

To celebrate the milestone, we’ve made things even better.

First, we’ve simplified our design.   Posts on the left, topics on the right, and a search bar at the top.   We’ve even gone through the site and re-tagged and re-categorized each post to make it more intuitive for folks to find posts on-topic.

Second – and we’re most excited about this – we’ve added a Resources Page with free construction law resources.   Highlights of the free Resoucres include:

  • Construction Law Blog Directory.   This is the only directory of construction law focused blogs on the web.  We list them all outright, but also sort and organize the blogs by state and topic (green building v. chinese drywall, for example).   Something missing?   You can add your link to our directory by filling out the form at the bottom of the directory’s page.
  • Avvo Legal Guides and Answers.    Wolfe Law Group participates in the legal Q&A forum and publication of legal guides at the lawyer-rating website, Avvo.com.   We stream those answers and guides to you on the Monitor.
  • Free Forms and Documents.   Powered by JD Supra, we provide visitors with free forms, legal pleadings, and other types of documents.
  • Webinars.   Our webinars and construction law presentations, powered by SlideShare.

Third (and finally), we’ve brought back three Special Feature category of posts:  (1) About our Services; (2) Around the Web; and (3) From the Experts.

We’ll build upon the Resources page as time goes by, and continue posting about important  construction law issues.   You can subscribe the the Monitor by RSS Feed, by following us on Twitter, or liking us on Facebook.

Around the Web in Construction Law – April 23, 2010

These past two weeks, there  were some interesting Chinese Drywall posts, a great deal of Green Building issues in the news and a milestone in modern social networking.

Great Avvo Legal Guide Available With Information on Florida Lien Laws

Florida attorney Neal Ian Sklar just this week published a really informative Legal Guide about Florida Construction Liens over at the lawyer rating website, Avvo.com.

The guide starts out by identifying the “dual purpose” of Florida’s construction lien statutes. While the author is speaking about Florida law only, the “dual purpose” breakdown is really applicable across the country.

What is this dual purpose?

Well, on the one hand, lien statutes are crafted to protect contractors, subcontractors, suppliers and design professional’s right to get paid for work put into a project. The law, in other words, doesn’t want a property owner to benefit from the improvements to property without paying the folks who put the time and materials therein.

You may be thinking “of course.”

The other purpose is a bit more hidden in the statutes. That purpose is to protect property owners from having their property improperly or unreasonably encumbered.

To balance these two purposes, lien laws across the country can sometimes feel schizophrenic.

Neal’s legal guide over on Avvo discusses the Florida lien laws in this context, and he does a good job of explaining how the two purposes are served by the Florida statutes.

While lien laws vary from state-to-state, understanding the “dual purposes” of these statutes provides contractors, subcontractors, suppliers and others a big picture understanding of how these statutes work…which, although each state’s laws are different, gives them a good grasp on the general rules they’ll need to follow to successfully use the laws.

And when a state’s specific requirements are needed…consult a great legal guide like Neal’s.

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

Can I File A Mechanics Lien For This?

Lien laws vary from state-to-state, but across the country it’s a consistent principle that contractors and suppliers can only file mechanic’s liens for work they perform on a construction improvement project.

This begs the very important questions – what is a construction improvement project? And beyond that, what is a construction improvement?

With respect to Virginia’s law on the issue, the Virginia Real Estate, Land Use and Construction Law Blog just posted on this topic: The Line Between Furniture and Fixtures: What Constitutes An Improvement, Part II. The post quotes a recent federal civil case, Summit Community Bank v. Blue Ridge Shadows Hotel & Conference Center, LLC, whereby the judge distinguished between installed cabinets (which can be liened) and furniture delivered to the project (which cannot be liened) saying:

It is not sufficient for materials to simply add value to a building by their mere presence without any further connection to the building.

The law in Washington and Oregon is very similar to Virginia. In both of these states, claimants may lien for work they perform in the “improvement of real property” or work used “in the construction of any improvement.”

Louisiana’s lien law is a bit more unique in this regard, and perhaps the most unique in the nation. In Louisiana, claimants may file a lien whenever they perform services in connection with a “Work.” A “Work” is defined as follows by the statute (LA RS 9:4808):

A work is a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.

I once represented a claimant in a Louisiana action against it to remove a mechanics lien, whereby I submitted a memorandum to the court distinguishing “work” (little w” from “Work” required by the statute (big w). I quoted the 1985 Louisiana Fourth Circuit case Lake Forest, Inc. v. Crilot Co., et al (466 So.2d 61) wherein a subcontractor’s lien against a property for excavation work related to the operation of a sand pit was challenged.

Interesting about this case is that there was no building or “improvement,” but the lien was found valid because the work was considered a “Work,” with the court explaining as follows:

Although “improvement” language is used in this general statement, La. R.S. 9:4808 contains a broader wording. The definition of “work” as “a single continuous project for the improvement…or other physical change of an immovable…” appears to apply to this unique sand pit operation.

We conclude that this sand pit…was designed to improve Lake Forest’s property. At the very least the operation was for the “modification…or other physical change of an immovable.”

Summary

Here is a short summary of this post. It’s important to know what is and what is not an “improvement” to determine whether you can in fact file a construction lien for the work or materials you provided. It’s also important to answer that question within the context of the laws applicable to your project. Most of the stuff is black & white…but in some cases, there can be a little gray.

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

No Need To Become A Fan…Just “Like” Us

When I logged onto the Wolfe Law Group page on Facebook this morning, I was greeted with a message that the page would no longer have “fans,” but instead would invite users to “like” our practice.   It’s an effort to be more “lightweight” to users, and hopefully, increase a pages fan base. It just might work too.

Before logging into our admin page, I stumbled upon another businesses FB page and saw the “become a fan” button replaced with “like.”. It confused me for a few seconds, but then I just passed it off as someone knowing a little more than me about Facebook, and knowing how to change the call to action on the fan pages.

Low and behold the change was made on my page, too…and system wide.

With all of this said, let’s take this Facebook change our for a spin. No need to become a fanatic for Wolfe Law Group or anything. After all, we’re just a law firm. Borrrr-ing.

But, you can at least like what we do, eh? That ain’t so hard.

http://fb.wolfelaw.com

Lane Powell Launches Blog on Sustainability and Climate Change

While technically our “competition,” there’s nothing wrong with us welcoming the Lane Powell law firm to the sustainability conversation with the launch of their new blog, Sustainability and Climate Change Reporter.

By gleaning over the promo materials, it appears the blog will focus on environmental regulation and sustainable business practices…which, sometimes, fits right in with our focus: Green Building and Design issues.

Our favorite post from Lane Powell’s new reporter so far: Oregon’s Renewable Energy Tax Credit Program Undergoes Revisions.

The new blog from Lane Powell will be well-written and informative, and for those interested in sustainability laws and the green industries, they should subscribe (and subscribe to us, too, of course).

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Green Building Law Blog.