A bilateral contract modification typically includes waiver and release language. The contractor acknowledges it is being compensated in full for the contract changes and releases the right to seek further compensation. If the contractor intends to reserve any claim and except that claim from the release, it must expressly so state. But what if that claim has not yet even arisen at the time of the contract modification?
In a troubling recent case, a contractor signed a contract modification. The government then proceeded to issue 279 additional extra work orders. When the contractor sought to recover for the cumulative impact of those changes on its labor efficiency, the government said the claim had been released under the prior contract modification. And a federal appeals court sided with the government.
What are your practices regarding reservation of rights when signing a contract modification. Is there any effective way to protect oneself if the courts are going to allow the prospective release of claims which have not even arisen at the time the contract modification is executed? As always, your comments are welcome below!
Next week's featured articles in Construction Claims Advisorcover:
- Contractor Released Cumulative Impact Claim
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