Unilaterally amending payment terms by conduct alone…Nice try!

Unilaterally amending payment terms by conduct alone…Nice try!

As a contractor, you might find yourself in a situation where the method for calculating payment originally agreed to in the contract becomes unworkable with the actual project scope or existing work-site conditions. Perhaps it would be beneficial to you if the contract contained different payment terms. While a contract can be changed through verbal or written agreement between the parties, can a party, by its actions alone, agree to revise payment provisions unilaterally imposed by another?

This issue was dealt with in Whissell Contracting Ltd v Calgary (City), 2017 ABQB 644. Whissell entered into a subcontract with SNC-Lavalin Graham Joint Venture (“SNC”) to perform certain work for the City of Calgary. The subcontract provided that payment would be calculated on a unit rate basis. Instead, Whissell began invoicing SNC on a force account basis claiming that soon after beginning work on the project, the scope of work and site conditions changed greatly from those anticipated at the time of its bid.  A number of force account sheets were signed by SNC field staff. SNC refused to pay Whissell based on Whissell’s force account rates, and Whissell applied for summary judgment. The Court dismissed Whissell’s application, taking issue with the fact that the wording on the force account sheets was never discussed with anyone at SNC who was involved in negotiating the original subcontract. The Court also noted that without additional evidence, change orders issued by SNC reflecting an increase in the value of the subcontract did not operate to amend the subcontract.

How does this decision affect you?

The lesson to be learned is that the Court isn’t likely to look kindly on contractors unilaterally taking matters into their own hands when trying to unilaterally change the payment terms of the contract. Clear communication, particularly with those involved in the initial contract negotiation, may save you from an uncertain contractual relationship and costly litigation.

If you are negotiating a contract, are in the process of attempting to revise the terms of a contract, or are involved in a dispute over a contract, Field Law can help. For more information, contact Field Law to discuss your options.

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