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Contract Bound Owner To Payment Promises An Employee Made With Apparentauthority

Wednesday, May 26, 2010 04:21 am



Change Orders

Utilities Optimization Group, LLC v. Temple-Inland, Inc., 2010 U.S. Dist. Lexis 19886 (D. Tex. March 5, 2010)


A company may have to pay for unexpected price increases that an employee improperly approved. The mistake: The contract described the employee as the "coordinator" for change order approvals even though he had no actual authority to approve changes.


Utilities Optimization Group, L.L.C. (UOG) sued Temple-Inland, Inc. (Temple) for breach of contract, alleging  that Temple still owed UOG money under two construction contracts. Both contracts were purchase orders that explicitly stated that UOG "shall not exceed the commitment on the face of this order without written authorization in the form of a field change order/authorization form." The purchase orders listed a not-to-exceed contract price and cautioned that UOG had "to secure approval for any changes to the work scope" of the order, and "[a]ny changes that alter the value of this work must be documented on the field chan [...]

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