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No Change Order, No Problem If Proof Of An Oralagreement Is Sound

Friday, July 04, 2008 03:08 pm

No Change Order, No Problem -- If Proof Of An Oralagreement Is Sound

A subcontractor successfully held a general contractor to its promise -- given via an oral agreement that modified the subcontract -- to pay for equipment stand-down time.

In an adversary proceeding (connected to a Chapter 11 case), R&D Contracting (R&D) sought recovery of a $29,800 unpaid invoice for work performed under a contract with Jenkins Construction, Inc. (Jenkins) on a Michigan Department of Transportation (MDOT) project.

R&D claims it made an oral agreement with Jenkins to leave its own heavy equipment on the jobsite for a period of stand-down time (necessitated after another subcontractor caused a delay), for which Jenkins agreed to reimburse R&D. Thus, R&D submitted an invoice billing Jenkins for ten days of equipment stand-down time. Jenkins disputed the subcontractor's claim, calling the oral agreement invalid.

The word of an authorized employee sticks

At trial, testimony from R& [...]

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