An Administrator's Guide to California Private School Law

Chapter 17 – Construction

board must approve all change orders, or identifies the person or position that has the authority to bind the school for change orders. Even if schools have these protections in the contract, however, they may still be subject to the appropriate use of certain rules of law related to oral contracts. 2355 These rules may protect the contractor to the detriment of the school. The school may also inadvertently waive the written change order requirement if its representative agrees that a contractor should perform work without that contractor providing an estimate for that work. 2356 We strongly recommend schools do not permit oral approval of change orders and require any and all amendments to the contract be in writing. If a contractor performs extra work under a good faith understanding that the school provided approval, that contractor may be able to seek claims for reasonable value of its services. The contractor, however, typically must show that the individual directing it to perform extra work had the authority to act on the school’s behalf. 2357 A school can use the contract as a defense to claims for extra work if the contractor agreed in writing that it would not be paid for any extra work unless directed to perform that work, in writing, by the school’s board or identified authorized representative. LCW Practice Advisor B. P AYMENTS T O A ND W ITHHOLDING P AYMENT F ROM C ONTRACTOR Schools must make progress payments to the contractor within 30 days after the contractor provides its invoice, unless the parties agree to a different arrangement in the contract. 2358 Parties typically establish the amount of days within which a school must pay a contractor’s invoice in the contract. If the contract is silent on this issue, the statutory 30-day time frame applies. Schools may, however, withhold payments from a contractor if a good faith dispute exists. 1. G OOD F AITH D ISPUTES If a good faith dispute exists between the school and the contractor as to a progress payment due, schools may withhold up to 150 percent of the disputed amount from the progress payment. 2359 Schools should ensure a good faith dispute actually exists before withholding amounts owed to the contractor and should make a record of the reasons for the withholding. If a school fails to timely make these payments without an actual good faith dispute, the school is subject to a penalty of two percent per month of the amount wrongfully withheld. 2360 The prevailing party in any legal action brought to require payment is entitled to its costs and attorneys’ fees. 2361 Schools should ensure its personnel dealing with contractors are properly familiar with the contract requirements regarding changes to the contract. Schools that train construction personnel and staff that work with contractors are better protected from increases in project cost and time caused by unauthorized oral changes.

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 575