Legal Question in Construction Law in California

Change orders are tricky things. If you modified the job after the contract was signed, the contractor is entitled to a change order. The amount of the change order should have been negotiated before the change was implemented. If that is the case, then if you don't want to pay for the change say "forget it, stick to the original plan." If the change you requested has been implemented, however, you do owe extra and must pay for it. If you refuse to negotiate in good faith for the change order in that case, you will be breaching the contract and will be liable to the contractor for the reasonble value of the work (unfortunately I and many other lawyers have made plenty of fees litigating what is the reasonable value of disputed work).

If, on the other hand, the job has simply turned out to cost more than the contractor agreed to charge, with no changes in the scope of work, that is his problem. In that case you should absolutely refuse to sign a change order and if the contractor refuses to finish the job for the amount agreed, you can fire them, file a complaint with the Contractors State License Board, then bring in a new contractor to finish the job, and then sue the first contractor for the difference between $5,000 and the cost of the new contractor finishing the job.

I have over 20 years in construction law practice, and my last job for a paycheck was lead construction law attorney in the General Counsel's Office at SFO, so if you need anything further, please feel free to contact me.

Generally, no; a change order is an addendum or modification to an existing contract and failure of the parties to execute the change order leaves the original contract in place, unmodified.

However, the most common use of a change order is when the owner of a project decides to change the nature or scope of the work, e.g., wants a three-car garage instead of two, or wants marble countertops instead of Formica, after the price is decided upon and contract is signed. The change order will specify the additional work or costs the contractor will be incurring as well as the additional price for the changes. This is not to say that a change order cannot be used to increase a contract price with NO change in the work to be done, but why? Contractors are usually expected to live or die by their bids, and if they underbid, that's a learning experience for them.

If the job cost has gone up for reasons that are owner responsibility, that's another matter. There are also cases where the owner bears the cost responsibility for unforseen difficulties such as obtaining permits or excavating rock where loam was expected.

Without reading the contract or understanding why the contractor is over-running on costs and under-performing on percentage completion, I cannot really say whether the contract is breached, whether you can back out (it seems a bit late in the game) or whether you should tell the contractor to just finish the job as specified in the contract and for the previously-agreed contract price.

There are times when you should accommodate your contractor, others when you should tell him to perform for the agreed price, and a few others where you are justified in firing them and considering the contract sufficiently breached to do so without liability. Deciding which this is would require analyzing the contract and the performance to date and reasons why the overall results are not pleasing.