Contractors Zone





The recent case of F. Garofalo Electric Co., Inc. v. New York University, 2000 WL 280578, 705 N.Y.S.2d 327 (1st Dept 2000) follows a trend of strict contract compliance that courts are imposing with more and more consistency. In Garofalo, the electrical contractor commenced an action against New York University (NYU) for delay damages arising out of work at the NYU Medical Center in New York City. The construction manager was Morse Diesel International (Morse). Garofalo claimed that Morse failed to coordinate the work of the contractors and caused unanticipated delays. Garofalo further claimed that it was required to perform substantial extra work on the project and that NYU and Morse had orally agreed to pay for the work.

NYU moved for summary judgment dismissing Garofalo’s complaint on two grounds. First, NYU claimed that Garofalo failed to provide "contemporaneous written notice and documentation" of its claims as required by the partie’s contract. Second, NYU argued that Garofalo’s allegation that NYU and Morse ‘orally agreed’ to pay for extra work was barred by Section 15-301(1) of the General Obligations Law, commonly known as the Statute of Frauds. Garofalo could not show that it provided the required notice and documentation of its claims. Instead, Garofalo claimed that NYU and Morse had waived the requirements because its site employees had been instructed by Morse to keep track of its hours and materials and that payment for the extra work ‘would be taken care of at the end of the job’.


The trial court denied NYU’s motion, finding a triable issue of fact as to whether the notice and documentation requirements of the contract had been waived by the alleged verbal instructions of NYU’s construction manager, Morse.

The Appellate Division, First Department reversed the trial court and ruled in favor of NYU, dismissing Garofalo’s complaint. In a decision that keeps with a strict compliance trend in legal decisions concerning our industry, the Appellate Division found that the notice and documentation requirements of the contract regarding claims was a ‘condition precedent to recovery.’ In other words, Garofalo’s failure to provide timely notice of its claims and documentary support barred it from maintaining its action to recover damages.

With regard to the alleged oral agreement by Morse to pay for extra work, the Court accepted NYU’s statute of frauds defense, stating the rule that when a written contract provides that it can be modified only by a signed agreement, an oral modification of that agreement is not enforceable unless it is in writing.

If you are experiencing unanticipated events on a project that are causing you to lose time and money, it is imperative that you review your contract carefully so that your right to present a claim may be preserved. You must do this even if you are being verbally directed to proceed with extra work and assured that you will be paid. There are scores of cases where contractors relied on verbal directions to proceed only to find themselves on the wrong end of a legal decision barring recovery. Be sure to review your contract, develop a procedure for noticing and documenting claims and follow it. Otherwise, you will be taking a serious gamble with your ability to recover for legitimate claims.


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