A subcontractor discovers unforeseen conditions requiring additional work costing $15,000. The general contractor approves the work verbally but delays issuing a written change order. The subcontractor completes the work. What is the most appropriate action for the general contractor?
Correct Answer
B) Issue a change order retroactively and process payment
When work is performed with verbal approval from the contractor, the ethical and legally sound approach is to issue a retroactive change order documenting the approved work and ensure proper payment.
Why This Is the Correct Answer
Option B is correct because when a general contractor verbally approves additional work, they have created a binding agreement even without written documentation. The contractor has a legal and ethical obligation to honor their verbal commitment and compensate the subcontractor for work performed with their approval. Issuing a retroactive change order formalizes the previously approved work and ensures proper documentation for payment processing. This approach maintains good faith business relationships and avoids potential legal disputes over unpaid work.
Why the Other Options Are Wrong
Option A: Refuse payment since no written change order was issued
Option A is wrong because refusing payment despite verbal approval would constitute breach of contract and bad faith dealing. Verbal agreements for construction work are legally binding, and the lack of written documentation doesn't void the contractor's obligation to pay for approved work.
Option C: Pay only material costs, not labor
Option C is wrong because partial payment (materials only) doesn't fulfill the contractor's obligation for work they verbally approved. Labor costs are a legitimate part of construction work, and the contractor approved the entire scope of additional work, not just materials.
Option D: Require the subcontractor to absorb the cost
Option D is wrong because requiring the subcontractor to absorb costs for work the contractor verbally approved would be unconscionable and potentially fraudulent. The subcontractor performed work in good faith based on the contractor's approval and deserves full compensation.
Memory Technique
VAP rule: Verbal Approval = Payment obligation. If you approved it verbally, you must pay it fully.
Reference Hint
Florida Building Code Chapter 1, Contract Administration section, or Florida Statutes Chapter 713 (Construction Liens) for contractor payment obligations
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