What is considered a constructive change in contract terms?

• A. A change agreed upon by both parties
• B. A change that has not followed formal procedures but affects work
• C. An increase in the contract price
• D. An agreed upon delay in performance

Answer: (B)

A constructive change in contract terms refers to a situation where one party to the contract has taken action or made changes that were not formally authorized but have an impact on the work being performed under that contract. This often occurs when one party’s conduct or instructions lead the contractor to undertake additional work, which was not explicitly outlined in the contract terms.

The essence of a constructive change is that it results from actions or omissions that affect the scope of the contract, creating an obligation to compensate for increased costs or time. Since it does not adhere to formal change order procedures yet still has real implications for the contract performance, it is crucial for both parties to recognize these changes to avoid disputes regarding obligations and entitlements.

In contrast, a change that has been formally agreed upon by both parties would not be considered a constructive change, as it follows the proper protocol. Additionally, while an increase in contract price or a delay in performance could be associated with a constructive change, they are not defining characteristics of it. Constructive changes arise mainly from unformalized actions that impact the work.