In March 2022, an appellate court in New York ruled that a subcontractor who refused to perform a change order was in breach of contract and therefore was properly terminated by the contractor. McCarthy Concrete, Incorporated v. Banton Construction Company, 2022 NY Slip Op 2168 (3rd Dept. 2022).
The court found the subcontractor in breach because the subcontract allowed the GC to order changes which the subcontractor had agreed to perform “without delay". The subcontract also provided that “[p]ending resolution of any claim, dispute or other controversy, nothing shall excuse [plaintiff] from proceeding with prosecution of the [w]ork". Based on this language, the court rejected the subcontractor’s argument that it was justified in refusing to perform the work because the parties could not agree on a price for the change order work.
Comment:
Depending on the language in a subcontract, subcontractors who refuse to perform change order work risk being terminated and held responsible for completion costs.
Prior to signing, subcontractors should review their contracts with GC’s carefully and through negotiation seek to revise any change order provisions that force a subcontractor to perform change order work even where an agreement on price cannot be reached.
About the author: George Marco is an attorney practicing in the field of construction law. He also holds a Bachelor of Science in Mechanical Engineering and was previously employed as a Project Manager for a public improvement contractor.
If you would like more information regarding this topic or any other related to construction law please contact George Marco at george@gmarcolaw.com or call (516) 464-2320.
Disclaimer: This article is for informational purposes only and not intended to serve as legal counsel.
