The Verbal Change Order and the 10-Day Notice Clause
You are the project manager for a general contractor on a $1.2M interior renovation of an occupied retail store. The changes clause states that the owner will issue written change orders and that the contractor waives claims for extra work not noticed in writing within 10 days of the direction. On Day 40 the owner's facilities manager walks the site and verbally directs you to add 6 tons of structural steel to pick up a rooftop unit the tenant relocated - about $68,000 and 11 days of work. He says, "Just get it done, the paperwork will follow." You mobilize the fabricator the next morning. By Day 130 no change order exists, the steel is installed, and the owner's newly assigned project manager denies the cost, citing the 10-day clause.
1. At the moment of the verbal direction, what should you have done - and what does the 10-day clause realistically do to your claim?
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Immediate action: treat a verbal direction as a claim event, not a work order.
- Confirm in writing the same day. A short memo - date, who directed it, scope, your estimated cost and time, and the statement that you are proceeding under protest and reserving all rights - converts an oral instruction into a documented one. Email plus a hand-delivered letter is the practical standard.
- Check authority. The facilities manager is not necessarily the owner's designated representative. Read the contract's definition of Owner's Representative and, if he lacks authority, get confirmation from someone who has it. Apparent authority arguments are winnable but slow and expensive.
- Do not simply refuse to perform. On an occupied retail site, refusing usually creates a worse delay claim against you than the change is worth. Proceed, but proceed documented.
What the clause does: a written-notice requirement is enforceable in many jurisdictions as a condition precedent, so the failure is a real exposure, not a technicality. Your counterarguments are (a) the owner had actual knowledge - its own agent directed the work - so it suffered no prejudice from the missing paper; (b) the 10-day period is measured from the direction, and your same-day confirmation may substantially comply; and (c) waiver or estoppel where the parties' course of dealing shows verbal changes paid routinely. None of these is a sure thing, which is why the same-day memo is the whole game.
2. The work is complete and the claim is denied. Build the recovery case and identify what evidence you need.
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Theory of recovery: implied contract / unjust enrichment in the alternative to a contract claim, resting on the owner's direction and the owner's retention of the benefit.
Elements to prove, and the proof for each:
- Direction: the facilities manager's verbal instruction. Evidence: your same-day confirmation memo, daily reports naming him, text/email traffic, and any meeting minutes where the added steel appears.
- Notice and opportunity to object: proof the owner knew the cost and did not object - your cost estimate sent on Day 41, unanswered.
- Performance and benefit: steel shop drawings with approval stamps, delivery tickets, mill certs, photos, the inspector's sign-off on the rooftop curb.
- Reasonable value: the fabricator's invoice, erection sub's invoice, and a cost breakdown at contract markups - not a lump number.
Weaknesses to anticipate: the 10-day clause; whether the units and markups used match the contract's change-order pricing provisions; and whether the tenant, not the owner, caused the relocation (the tenant may be the responsible party under the lease).
Practical move: before litigation, send a documented demand with the cost backup and offer a walkthrough. Most of these settle at the number because the owner's own people created the paper trail.
3. Substantial completion arrives and the $68,000 is still unpaid, along with $120,000 in retainage. What deadlines and protections govern?
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Two separate clocks, and they are short:
- Contractual: the dispute-resolution clause probably requires a notice of claim and possibly mediation or a decision by the architect/owner within a stated period (commonly 10–30 days after the event, or before final payment). Miss it and you may lose the right to arbitrate or litigate the merits at all, independent of the lien.
- Lien / bond: mechanic's lien deadlines run from last furnishing of labor or materials, not from the change order date, and are typically 60–120 days depending on the state, with a suit deadline after recording. Where you have a payment bond (public work or a bonded private job), the bond claim notice period is a different, often shorter, deadline. Retainage is generally lienable.
Protections to exercise now:
- Send a written notice of non-payment reserving lien and bond rights before the deadline, not on it.
- Obtain a preliminary notice or notice to owner if your state requires one from a subcontractor-tier party.
- Consider a stop-payment notice to the lender if the jurisdiction allows it.
- Do not sign a final waiver or a conditional waiver that releases the change claim; use a waiver conditioned on actual receipt of cleared funds and expressly carve out the disputed $68,000.
- Check whether the contract makes retainage due at substantial completion versus final completion; if the owner is withholding for the steel dispute, that is improper holdover of retainage in many states.
Judgment call: filing a lien is cheap insurance against the deadline; it is releaseable and does not by itself destroy the relationship. Missing the deadline is unrecoverable.