Fundamentals of Construction Contracts: Notice Requirements

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November 13, 2013

Contracts almost universally require Contractors to give written notice of change orders and claims. This notice must usually be provided within a specific number of days from the event, which causes the change. Failure to satisfy notice requirements may invalidate your claim, or create a dispute which will consume time and effort to resolve. It is far better to give written notice and eliminate this potential stumbling block.

Contracts require written notice for good reasons. These include the following:

  1. The Owner needs the opportunity to investigate, consider options and make decisions.
  2. The Owner wants the opportunity to keep track of costs.

Exceptions to strict notice requirements have been recognized in some jurisdictions and may include the following:

  1. Constructive Notice – the Owner knew or should have known. This may include verbal notice, discussion at a meeting or superior knowledge by an Owner.
  2. The Owner was not prejudiced by lack of notice. The Owner would not have, or could not have, acted differently, even if it had been given formal written notice.
  3. Defective Specifications. When contracting with the Federal Government,
  4. Contractors are generally compensated for increased costs, reasonably incurred in attempting to comply with defective specifications, regardless of notice.
  5. Waiver of notice requirements. This may occur if the Owner does not enforce the written notice requirements of the contract. The parties, by their actions, may adopt a more informal change order process based upon verbal notice, followed by the incorporation of such changes into formal change order documents.

Regardless of the above exceptions, strict notice is enforced in some jurisdictions.

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Without written notice, your claim may be dead. On large complex projects, it is wise to make a detailed review of the specifications, and compile a table of notice requirements and time limits for giving notice for each requirement.

For more information on notice requirements for construction contracts, visit us at www.lorman.com for all of your contiuing education needs.

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