Business FinancesQuestion 1197 of 1632

A written, signed change order is important because it:

a.Cancels the original contract completely
b.Reduces the sales tax on the added materials
c.Removes the need for a building permit
d.Records the agreed scope and price

Explanation

A signed change order fixes the added scope, the price for it and any schedule effect before the extra work starts, which is what preserves the right to be paid for it; on a home improvement contract B&P §7159 requires the change to be in writing and signed. It modifies the contract rather than cancelling it, and the original terms continue to govern everything else. Material tax follows the purchase, not the paperwork. And added scope may well require a permit amendment rather than excusing one.

Law Reference: Bus. & Prof. Code §7159(c)(6)

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