The Changes clause of a construction contract gives the project owner the right to alter the scope of work, while making equitable adjustments to the contract price and schedule. The Changes clause also gives rise to the concept of a “constructive change” – an owner directive which, although not labeled as such, alters the contract requirements. But does the Changes clause require an owner to issue a change order when changed market conditions impose higher performance costs on a contractor? That question was recently presented to a Utah court.

Between the time a highway contractor bid and signed a fixed-price contract and the time the contractor performed the work, the market price of liquid asphalt oil almost tripled. The contractor argued that this “commercial impracticability” mandated a price adjustment under the Changes clause. The court disagreed. While commercial impracticability is sometimes used to excuse a contractor from performance, there is no case law supporting the concept of a mandatory price increase under the Changes clause. The risk of increased performance costs rested squarely with the fixed-price contractor.

Other cases this week involved a material supplier’s ability to maintain a lien and a proposal to use environmentally preferable products (EPPs) on a federal construction project. The supplier could not prove delivery to the job site or sale for use on a specific project, so the supplier could not maintain the lien. And the offer to use EPPs did not warrant any evaluation preference, as the solicitation did not call for that.