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Conditions Precedent, Oral Change Orders & Mechanic’s Lien Waivers

Peter Scalamandre & Sons v. FC  80 Dekalb Assoc, 2015 WL 3604613 (2d Dept, 6/10/15) is instructive on several issues frequently confronting contractors:

(1) When is a notice provision a killer (i.e. condition precedent) and when is it not? The rule as stated in Scalamandre is: “Where a construction contract contains a condition precedent-type notice provision setting forth the consequences of a failure to strictly comply, strict compliance will be required.” However, where the notice requirement does not set forth the consequences “substantial compliance with the the notice provision will suffice.” In Scalamandre there were two different notice provisions, so the court had the unusual opportunity to compare and contrast the two provisions finding different results. The court found that the first notice provision provided that the “failure to give written notice of a claim and detailed statements of the claim within the time specified shall constitute a waiver of such claim” which required strict compliance. The second provision did not set forth the consequences of non-compliance, thus only substantial compliance was required. Further, “substantial compliance will be found where there is sufficient correspondence between the parties to give the owner [or GC] actual notice of the claims” as was found here.

(2) Regarding the usual contract provision requiring that changes in the work must be authorized by a written change order “under NY law, oral directions to perform extra work, or the general course of conduct between the parties, may modify or eliminate contract provisions requiring written authorization or notice of claims.”

(3)  A waiver of claims in a mechanic’s lien waiver will not be enforced where the form “was treated by the parties as a mere receipt of the amounts stated, and the waiver was not intended to encompass or preclude claims … for additional work.”


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