Cardinal Change vs. Abandonment
Previously on the blog, we defined what constitutes a cardinal change in a construction contract. Importantly, California is one of the few states that differentiates between a cardinal change and the related legal theory of “abandonment.” It is important for property owners and contractors to understand the difference and the implications of both.
A cardinal change is a change that goes beyond the permitted changes detailed in the contract. It is usually a request so far outside the scope of the original contract that it frustrates the very purpose of the contract (click here for examples from our previous blog).
“Abandonment” occurs when a property owner is said to have “abandoned” a project or property. Abandonment can be shown where parties fail to follow change order procedures, when the final product differs substantially from the original contract, and even when there are impermissible cardinal changes.
The legal implications of cardinal changes and abandonment, and specifically the remedies and damages that are available to both, provide that a contractor may recover damages that are a result of excessive, owner-directed changes to a project, beyond what the parties could have reasonably anticipated at the time of contracting.
In fact, in most jurisdictions the two terms are sometimes used interchangeably. However, according to the California Supreme Court, the two doctrines are “fundamentally different” and the scope of damages available also differ. This nuanced issue in construction contract law may seem small, but it can have a significant affect on the amount of damages a contractor may recover.
In Amelco Electric v. City of Thousand Oaks, 15 Cal.Rptr.2d 900 (2002), the California Supreme Court held that under an abandonment claim, a contractor is entitled to recover the total cost (less payments received) for work both before and after the contract was abandoned. Under a cardinal change claim, however, the contractor is only entitled to breach of contract damages for the additional work constituting a cardinal change.
If you have any questions about construction contracts, consult with an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you.