By Bruce Jervis
A public project owner has the right to issue unilateral directives under the contract. While a contractor is obligated to follow a directive, the contractor has the right – under the dispute procedures of the contract – to pursue a claim for additional compensation. But what happens when a unilateral directive includes waiver and release language?
On a recent federal project, the government directed extra work but wanted to pay based on the government’s cost estimate, not the contractor’s documented actual costs. The government issued a “unilateral modification” to the contract. The document contained payment-in-full and release of claim language. The document also included a signature line for the contractor. The contractor unwittingly signed.
Fortunately for the contractor, it was ruled that a unilateral modification is inconsistent with the mutual intent to make a final resolution of a claim for extra work. The contractor was not bound by the waiver and release clause.
The lesson here is that a “unilateral” document from a project owner should be treated as such by the contractor. There should be no execution or assent in any manner. What has been your experience with unilateral change orders and modifications? Your comments are welcomed.
