The Cardinal Change Doctrine: An Important But Limited Tool to Protect Against Excessive Scope Changes
A fundamental principle of contract law is that one party cannot unilaterally change the terms of the agreement. Nevertheless, most construction contracts include provisions allowing the owner to unilaterally change the scope of the contractor’s work. These provisions often outline a process by which the parties can negotiate an additional amount of time or compensation owed to the contractor as a result of the change, but the contractor is typically required to perform the changed work right away, before any decisions about additional time or compensation have been made. An owner’s right to change the scope of work on a project is not unlimited, however. Enter the “cardinal change doctrine.”
Generally speaking, the cardinal change doctrine prohibits an owner from directing changes that fundamentally alter the nature of the project. For example, an owner that contracts for the construction of a house could direct the contractor to use a different paint color, but it could not direct the contractor to build a second house. Such a drastic modification to the scope of the original contract is considered a “cardinal change,” and an owner’s directive to perform such a change constitutes a breach of the contract. The “cardinal change doctrine” thus serves as an important check on an owner’s ability to direct changes to a contractor’s scope of work. But the cardinal change doctrine’s applicability is both rare and circumstance specific, as a recent decision by the Appellate Court of Connecticut shows.
In Semac Elec. Co., Inc. v. Skanska USA Building, Inc., the Appellate Court of Connecticut was asked to resolve competing breach of contract claims arising out of a project to renovate a hospital in Stamford, Connecticut. About a year into the project, the work had already fallen several months behind schedule. The general contractor sought to make up the time by increasing the pace of its subcontractors’ work. Among other things, the general contractor demanded that its electrical subcontractor work overtime hours and commit additional manpower to the project beyond what the subcontractor had promised in its original bid. The general contractor also demanded that the electrical subcontractor increase its flexibility in working around other trades and in working between sections of the building. The subcontractor asserted that the cumulative effect of these scheduling and sequencing changes constituted a cardinal change. Accordingly, it informed the general contractor that it was stopping all work until the general contractor agreed to provide additional compensation and revised financial terms. Instead, the general contractor terminated the electrical subcontractor and took possession of its materials, tools, and equipment. The subcontractor filed suit and alleged that the general contractor breached the contract under the cardinal change doctrine. The general contractor’s counterclaim alleged that the subcontractor breached the contract by abandoning the project. Read more
