Most disputes or disagreements on a construction project are resolved at the project level. The vast majority of project disputes do not require the assistance of lawyers, who are often only utilized to help parties come to an agreement and to try to ensure the agreement is enforceable. But the project team can accomplish these objectives.

Here are tips for making and documenting agreements at the project level to help ensure they are enforceable.

Decide all “material” terms

For agreements to be enforceable, they need to contain all material terms. What counts as a material term usually depends on the circumstances. Material terms are usually terms that would affect a person’s decision making in making the deal. Price, time and quantity are usually material terms in construction contracts. For example, if a dispute about labor to complete an electrical change order is resolved, the amount of labor should be specified, along with how much the labor will cost and when that labor will be completed.

Oral agreements can be enforceable, but put them in writing anyway

Oral agreements are generally valid, but they are much harder to prove, so it makes sense to document all agreements in writing. For example, a prime contractor and a subcontractor agree to resolve a dispute related to material shortage by the subcontractor providing additional materials at cost by Thursday. On Thursday, the subcontractor provides a change order to the prime that has the materials at the subcontractor’s regular price.

The oral agreement is valid and can be enforced if the prime can prove it was made and can prove all the material terms of the agreement. But it is typically very difficult to prove the terms of an oral agreement. The prime will argue the additional labor was to be provided at cost. The subcontractor will argue the agreement was just to provide extra labor, with its standard markup. Because of that, it always makes sense to get the agreement in writing to avoid the uncertainty and hassle of proving oral agreements.

Be as clear as possible

When are putting an agreement in writing, it is important to be specific. For example, the prime contractor and a subcontractor are in a dispute related to whether the contract requires certain labor. The prime believes it does and the subcontractor believes it does not. To resolve the dispute, the parties agree that the subcontractor will complete the labor and bill the prime for the labor at cost. An agreement like “subcontractor will provide labor at cost” is in writing and does count for something, but if there is a dispute about the agreement, that writing is not likely to be very helpful.

It leads to questions like: Is the labor at cost applicable to the rest of the contract (or just the additional work that lead to the agreement)? When does the subcontractor have to provide the additional labor by? Are only a certain number of hours subject to the modified price of labor?

An agreement like this is significantly clearer: “Prime and subcontractor agree that subcontractor will provide the labor needed to complete the electrical work associated with the park lights for phase 2 of the project. The subcontractor will provide that labor at cost ($25/hour), for up to 150 hours of work. That work will be completed by Oct. 2, 2020.”

Insist on a change order

If a change order is not immediately available, document the agreement via email. Documenting a change to the contract via change order should be practical in most circumstances. All project parties should expect it. But if it is not possible to get the agreement in a signed change order for any reason, make sure it is documented and agreed to.

Some parties send a confirmation email stating the terms of the deal. But simply documenting the agreement in a one- sided text message or email is not enough. Instead, confirm the material terms of the agreement in an email and then request that the other contractor confirm the terms of the agreement via a reply email. After reciting the material terms, simply write something like: “Please confirm these are the terms of the agreement we worked out to resolve the material shortage on the park project.” Then, ensure that the subcontractor responds in the affirmative. Follow up with the subcontractor until there is a response email that accurately confirms the terms of the agreement. After that, make sure to sign a change order based on the terms in the email as soon as possible.