FACT SCENARIO C (Questions 9-12):

Geddy Construction (GC) has a written contract with Owner to furnish and erect a 10,000 sq.ft. metal building in Ripley, Oklahoma. The contract between GC and Owner requires all changes to be accomplished by written change order or written change directive and is governed by AIA Document A201-2017, which sets forth a detailed procedure for the submission of claims, mediation and arbitration. GC enters into an oral contract with Subterranean Construction (Sub) to perform sitework and to construct the building pad. After construction begins, Owner verbally directs GC to increase the size of the building to 15,000 sq.ft. Owner refuses to sign a written change order or to issue a written change directive. GC, in turn, verbally directs Sub to construct a larger building pad to accommodate the increased size of the metal building. To keep the project moving forward, GC and Sub perform the additional work despite Owner's failure to sign a written change order or issue a change directive. GC timely submits a claim to the Initial Decision Maker for the added cost. After the claim is denied, GC initiates the contractually-required mediation and arbitration processes. In the interim, Sub gets tired of waiting for payment and files a separate lawsuit against GC. The project is completed shortly thereafter without further incident and Owner accepts all of the work, despite refusing to pay for the extra cost associated with increasing the size of the building.

Question

As part of its defense to GC's claim, Owner argued that GC took the risk of non-payment by proceeding with the work contrary to the requirement of a written change order in the contract. What is the likely outcome of Owner's defense and overall effect on GC's claim?

Group of answer choices

Owner is correct. Article 7 requires changes affecting time or price to be memorialized by a written change order. By proceeding without one, GC waived any right to payment for the extra work and Owner should be absolved from liability.

Owner'sargument will fail because GC can use the parol evidence rule to establish that an agreement had been made concerning the extra work.

Owner's argument will likely fail because Title 61 O.S. 1, 2(A) and 2(B) provides for bonds that protect contractors when they have not been paid for their work. So long as GC perfects its bond claim, Owner's defense won't matter.

Since Owner orally directed the extra work to be performed, and it was performed to Owner's satisfaction by GC, GC is entitled to payment notwithstanding the failure to execute a written change order. See, 15 O.S. 237 andKennison v. Baldwin, 1960 OK 93.