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Friday, March 4, 2005

Oral change orders are too indefinite to enforce

A homebuilder who put a clause in a contract requiring all change orders to be in writing could nevertheless recover for oral change orders because the clause was orally waived, according to the Tennessee Court of Appeals, but he went on to lose because the changes and the allagedly agreed upon amounts were not certain enough to be enforced.

Based upon our careful analysis of the evidence with respect to each of the matters for which Mr. James seeks additional payment, we are compelled to the conclusion that there was not "a meeting of the minds of the parties in mutual assent to the terms" at issue. Our reasons for this conclusion, as set forth above, are varied. However, with respect to all of the items listed, we find that the parties "have not expressly or implicitly agreed upon a reasonable price nor have they agreed upon a practicable method of determination of price and, accordingly we hold that any agreement Mr. James alleges the parties had that they would pay for these charges over and above the original contract price of $360,000.00 is unenforceable. We further hold that by refusing to sell the Vatts the house unless they pay the asserted additional charges Mr. James materially breached the contract which provides that he sell them the house for $360,000.00. Accordingly, the Vatts are entitled to a refund of the $5,000.00 earnest money deposit which currently remains in escrow. The Vatts are further awarded reasonable attorney’s fees and court costs pursuant to . . . the contract . . . .

Vatt v. James, No. E2004-00785-COA-R3-CV (Tenn. Ct. App. Feb. 28, 2005).

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