February 13, 2023
Defective and Deficient Contract Documents: Time Limits on Extra Work Claims
This is the sixth blog post in a seven-part series that discusses defective and deficient contract document claims.
When a contractor requires additional time and costs to perform extra work, perhaps because of changes to drawings and specifications, contract notice provisions often require the contractor to notify the owner of this need within a specified time period from the occurrence. Likewise, a subcontractor may need to provide such notice to a general contractor. Timely claim submissions may be binding on a subcontractor because of an effective “flow-down” provision.1
For example, in Abercrombie v. Vandiver,2 a contractor building a railroad performed a substantial amount of extra work that the owner requested and accepted. The contract provided that “[n]o claim for extra work will be considered except it be made in writing…within one month after said work has been done.”3 Because the contractor failed to provide timely, written notice, the Alabama Supreme Court denied recovery for extra work, explaining that timely, written notice was a condition precedent to the contractor’s right to receive the compensation.4
U.S. federal case law generally holds that failure to comply with specific, strict time requirements for claim notice is not per se fatal so long as actual notice is given. The federal courts have examined, as a factor, whether failure to give timely notice has prejudiced a party. State courts typically strictly construe private commercial contracts that include notice requirements. Courts must consider whether the notice requirement in a construction project should be strictly construed and whether it is unrealistic or unfair, for example, to require a contractor or designer to give notice of and quantify a delay and increased cost claim within days of its origin when it is not even clear that a claim or impact will ultimately arise.
A more problematic situation can occur when a revised set of drawings is issued with numerous changes. The contractual party submitting the changes may not be able to rely on the contract’s notice provisions to avoid liability for the increased time and costs required to perform the changed work.
For example, a general contractor made some 1,300 revisions to original drawings during the course of contract work on the construction of a coke battery. About 20 percent of these changes were made after the project completion date. When an electrical subcontractor then submitted a delay claim,5 the contractor asserted that the subcontractor had not complied with the contract extra work clause, which required claims for extra costs to be made within 30 days of receipt of any drawing revision and, further, that no work was to be performed until written authorization was received from the general contractor. The trial court ruled that because of the massive changes and the pressure that the contractor placed on the subcontractor to proceed with the work, the contractor could not rely on the extra work clause. In affirming this holding, the court reasoned:
The defendant submitted a huge number of revisions that drastically changed the scope of the work. It then pressed the plaintiff to hurry and complete the work, which left the plaintiff with little time to compute costs and submit them. In addition, the plaintiff notified the defendant that it felt this situation required dispensing with the 30-day clause.
Seen in this light, the district court’s reference to the defendant’s obligation to speak out makes sense. We cannot say that the court erred in concluding that a defendant that creates such a difficult situation for completion of the contract as that here and who has notice of the plaintiff’s state of mind should speak out and say it intends the letter of some clause of the contract to be followed.6
An owner may constructively change contractual notice requirements within specified time limits for defective plans and specifications if it was provided informal notice,7 approved payments for additional work for other claims where the contractor did not adhere to the same notice provisions,8 or verbally promised time extensions and additional costs without receiving written claims.9
1 See, e.g., Weigand Constr. Co., Inc. v. Stephens Fabr., Inc., 929 N.E.2d 220, 227 (Ind. Ct. App. 2010).
2 See 28 So. 491 (Ala. 1900).
3 Id. at 493.
4 Id. at 496.
5 E.C. Ernst, Inc. v. Koppers Co., Inc., 626 F.2d 324, 327 (3rd Cir. 1980).
6 Id. at 330.
7 See, e.g., Vern’s Elec., Inc. v. Mount Leb. Sch. Dist., No. 1197 C.D. 2007, 2008 WL 9398643 (Pa. Commw. Sept. 12, 2008) (holding that letters provided by contractor to owner describing difficulties encountered on project effectively notified owner of the operative facts underlying claim and satisfied the 21-day notice requirement in the contract); James Corp. v. North Allegheny Sch. Dist., 938 A.2d 474 (Pa. Commw. Ct. 2007) (holding that owner had actual notice of contractor’s claims because owner clearly knew of the operative facts giving rise to the contractor’s claim, thus the 21-day notice requirements of the contract were satisfied, “albeit informally”); see also First Gen. Constr. Corp. v. Kasco Constr. Co., No. 10-2655, 2011 WL 2038542 (E.D. Pa. May 24, 2011) (“Pennsylvania law takes a more lenient approach to construing notice provisions in construction contracts whereby the spirit of the provision, rather than the strict terms, dictates whether a contractor seeking compensation for a claim or claims complied with the contract’s notice provisions.”)
8 See, e.g., Transpower Constructors v. Grand River Dam Authority, 905 F.2d, 1413 (10th Cir. 1990).
9 See, e.g., Commercial Contractors, Inc. v. United States Fidelity & Guaranty Co., 524 F.2d 944, 953 (5th Cir. 1975).
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Defective and Deficient Contract Documents: An Introduction
This is the first post in a seven-part series that discusses defective and deficient contract document claims.
Defective and Deficient Contract Documents: The Spearin Doctrine
This is the second post in a seven-part series that discusses defective and deficient contract document claims.
Defective and Deficient Contract Documents: Contractor's Entitlement to Recover Costs
This is the third post in a seven-part series that discusses defective and deficient contract document claims.