Contract Modification Versus a Cardinal Change

Contract modifications and cardinal changes are separated by degree. In the construction industry, contract modifications are quite common and basically consist of minor or slight changes to the parties' existing agreement within the scope of such agreement. For example, an owner and contractor enter into a construction contract that calls for the contractor to lay bathroom tile in twenty-five homes in a thirty-home residential development. The parties may later modify the contract via a change order to expand the contractor's scope of work to include the remaining five homes in the development.

A cardinal change is so severe as to be beyond the scope of the existing agreement such that an entirely new contract, with all the attendant formalities, is required. A contractor is not obligated to complete work pursuant to a cardinal change. Basically, a cardinal change is a substantially different undertaking from that originally contemplated by the parties. Consider the above contract between the owner and the contractor. If, instead of adding bathroom work for five additional homes, the owner wants to expand the contractor's scope of work to include kitchen tile work in all thirty homes and wants to shorten the completion date by sixty days, a new contract would likely be necessary. Not only is the contractor's scope of work greatly expanded but also the time in which he has to complete his work is substantially shortened. This would be termed a cardinal change from the terms of the original contract.

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