IN CALIFORNIA, THE ORIGINAL CONTRACT TERMS APPLY TO ADDITIONAL WORK

IN CALIFORNIA, THE ORIGINAL CONTRACT TERMS APPLY TO ADDITIONAL WORK

Architects and engineers typically put significant time in detailing their scope of work. The scope of work, however, may broaden for multiple reasons during design and construction and the parties often do not have time to agree on additional payment terms before the work is done. At least one California Court has now held that engineers who incur extra expense due to increased work scopes will not be hung out to dry.

The Ratcliff Architects (“Ratcliff”) provided design services for a hospital renovation and expansion project. Ratcliff contracted with Ted Jacob Engineering Group, Inc. (“TJEG”) for mechanical and electrical engineering services.

TJEG’s scope on the project increased at the request of Ratcliff. The parties attempted to negotiate a price for TJEG’s additional services, but were unsuccessful. TJEG then submitted fee invoices for the additional services, some of which Ratcliff did not pay. TJEG sued Ratcliff.

The California Court of Appeals held that, in the absence of a negotiated agreement on price, an engineer may pursue claims seeking a judicial determination of additional fees when it performs additional work. The engineer is not required to elect between abandoning the job and forfeiting its right. California courts favor completion of the project. Moreover, the engineer is entitled to a reasonable fee under the original contract terms, which suggests the engineer is covered by the terms of the original contract regarding the additional work. It will be interesting to see if this one lands at the California Supreme Court.