CACI 4522 Waiver of Written Approval or Notice Requirements for Changed or Additional Work

New December 2010; Revised June 2011

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This instruction is a variation of CACI No. 336, Affirmative Defense—Waiver. Use of this instruction is almost certainly limited to private contract disputes. (See P&D Consultants, Inc. v. City of Carlsbad (2010) 190 Cal.App.4th 1332, 1344 [119 Cal.Rptr.3d 253] [public contract change-order requirements not subject to oral modification or modification by conduct]; cf. Weeshoff Constr. Co. v. Los Angeles County Flood Control Dist. (1979) 88 Cal.App.3d 579, 589 [152 Cal.Rptr. 19] [public agency may waive written change order requirements].)

When a contractor asserts a claim for compensation for changed or additional work (see CACI No. 4520, Contractor’s Claim for Changed or Extra Work), the owner may assert that the contractor is not entitled to payment because it failed to obtain the owner’s written approval or failed to give written notice before performing the changed or additional work. (See CACI No. 4521, Owner’s Claim That Contract Procedures Regarding Change Orders Were Not Followed.) The contractor is entitled to counter this defense by showing that the owner expressly or impliedly waived the contract’s requirements.

The general rule of contract law is that waiver must be proved by clear and convincing evidence. (Ukiah v. Fones (1966) 64 Cal.2d 104, 107–108 [48 Cal.Rptr. 865, 410 P.2d 369].) Some construction law cases, however, have not mentioned this requirement, though there was no discussion of the burden of proof. (See Healy v. Brewster (1967) 251 Cal.App.2d 541, 552 [59 Cal.Rptr. 752]; Howard J. White, Inc. v. Varian Associates (1960) 178 Cal.App.2d 348, 353–355 [2 Cal.Rptr. 871].) If the clear-and-convincing-evidence requirement is included, also give CACI No. 201, Highly Probable—Clear and Convincing Proof.

•Modification of Contract. Civil Code section 1698.

•Enforceability of Change Orders. Business and Professions Code section 7159.6 (applicable to “home improvement contractors” as defined in Business and Professions Code section 7150.1).

•“ ‘[W]aiver is the intentional relinquishment of a known right after knowledge of the facts.’ … The burden … is on the party claiming a waiver of a right to prove it by clear and convincing evidence that does not leave the matter to speculation, and ‘doubtful cases will be decided against a waiver.’ … The waiver may be either express, based on the words of the waiving party, or implied, based on conduct indicating an intent to relinquish the right.” (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31 [44 Cal.Rptr.2d 370, 900 P.2d 619], internal citations omitted.)

•“It is settled law that the parties may by their conduct waive the requirement of a written contract that no extra work shall be done except upon written order. … [¶¶] ‘Waiver may be shown by conduct, and it may be the result of an act which, according to its natural import, is so inconsistent with the intent to enforce the right in question as to induce a reasonable belief that such right has been relinquished.’ ” (Howard J. White, Inc., supra, 178 Cal.App.2d at pp. 353–355.)

•“Where the terms of a written contract require that extra work be approved in writing, such provision may be altered or waived by an executed oral modification of the contract.” (Healy, supra, 251 Cal.App.2d at p. 552, internal citations omitted.)

•“[Defendant] places reliance on the provision of the subcontract which provides that any work involving extra compensation shall not be proceeded with unless written authority is given by [defendant]. But under section 1698 of the Civil Code, an executed oral agreement may alter an agreement in writing, even though, as here, the original contract provides that extra work must be approved in writing. The oral request for and approval of extra work by [defendant] was, when fully performed, an oral modification of the written June 8th subcontract. … [¶] Whether a written contract has been modified by an executed oral agreement is a question of fact, and the finding, in the instant case, is supported by substantial evidence. … [¶] Defendant cannot be heard to say that a written order was not first obtained as required under the subcontract. [Defendant] by its acts and conduct waived and is estopped to rely upon the subcontract provision requiring its prior written approval before proceeding with work involving extra compensation.” (MacIsaac & Menke Co. v. Cardox Corp. (1961) 193 Cal.App.2d 661, 669–670 [14 Cal.Rptr. 523], internal citations omitted.)

•“The written contract provided that the defendant should not be charged for ‘extras’ unless ordered in writing. Upon this basis defendant contends that recovery for the ‘extras’ furnished by plaintiff is barred. The provision in a building contract that an owner may be charged only for ‘extras’ which are ordered in writing may be waived or modified by an executed oral agreement. As a consequence, recovery by the contractor for the reasonable value of ‘extras’ has been upheld where they have been furnished at the request of the owner, became a part of the construction work generally described in the building contract, and are accepted by him, even though the request therefor was oral and the building contract provided that he should be chargeable only for such ‘extras’ as were requested in writing.” (1st Olympic Corp. v. Hawryluk (1960) 185 Cal.App.2d 832, 841 [8 Cal.Rptr. 728], internal citations omitted.)

•“Defendants concede that the labor for which payment is sought was actually performed and that the backfill was supplied. They accept the finding that the charges were reasonable, and the record discloses that the benefits of the labor and material have accrued to the premises. Defendants rest their contentions on the provision of the contract requiring written change orders. The parties may, by their conduct, waive such a provision with the result that the subcontractor does extra work without a written order. If the circumstances indicate that the parties intended to waive the provision, the subcontractor will be protected.” (Frank T. Hickey, Inc. v. Los Angeles Jewish Community Council (1954) 128 Cal.App.2d 676, 682–683 [276 P.2d 52], internal citations omitted.)

•“The record shows that extras were ordered and approved by [cross-defendant] in the amount of $8,097.50. Under the law this amounted to a modification of the written contract. [Cross-defendant] places great reliance on the provision of the contract which provides that alterations must be in writing, and points out here that he only approved one alteration in writing. But under section 1698 of the Civil Code, an executed oral agreement may alter an agreement in writing, even though, as here, the original contract provides that all changes must be approved in writing. This is so because the executed oral agreement may alter or modify that provision of the contract as well as other portions.” (Miller v. Brown (1955) 136 Cal.App.2d 763, 775 [289 P.2d 572], internal citation omitted.)

•“The evidence showed that the extra work on the building was done with the knowledge and consent of defendant and his agent, and that they waived the written stipulation that a separate written estimate of extra work should be submitted, by orally agreeing to and countenancing the work without written estimates. Had it not been for defendant’s consent thus given, the work would not have been thus done. He will not now be permitted to repudiate work done in the manner that he consented to, on any ground that it was not done in accordance with a previous written agreement.” (Wyman v. Hooker (1905) 2 Cal.App. 36, 41 [83 P. 79].)

•“Unlike private contracts, public contracts requiring written change orders cannot be modified orally or through the parties’ conduct. Thus, even if [plaintiff]’s evidence pertaining to the oral authorizations of a city employee for extra work is fully credited, [plaintiff] cannot prevail.” (P&D Consultants, Inc., supra, 190 Cal.App.4th at p. 1335.)

•“California courts generally have upheld the necessity of compliance with contractual provisions regarding written ‘change orders.’ … However, California decisions have also established that particular circumstances may provide waivers of written ‘change order’ requirements. If the parties, by their conduct, clearly assent to a change or addition to the contractor’s required performance, a written ‘change order’ requirement may be waived.” (Weeshoff Constr. Co., supra, 88 Cal.App.3d at p. 589, internal citations omitted.)

•“In addition to being factually inapposite, the continuing viability of Weeshoff is questionable. In pronouncing that ‘California decisions have also established that particular circumstances may provide waivers of written “change order” requirements,’ and ‘[i]f the parties, by their conduct, clearly assent to a change or addition to the contractor’s required performance, a written “change order” requirement may be waived,’ the court cited cases involving private parties, not public agencies … . Since its publication 28 years ago, no case has cited Weeshoff for this point. This is understandable as it is contrary to the great weight of authority, cited above, to the contrary.” (Katsura v. City of San Buenaventura (2007) 155 Cal.App.4th 104, 111 [65 Cal.Rptr.3d 762], internal citation omitted.)