Today’s post is thanks to a discussion with an engineer following a talk I gave for the ASCE of North Carolina. He asked about owners trying to recover for obvious mistakes, for which they’d have to pay anyhow.
That brought me to the topic of betterment. What is betterment, and why is it important in the construction world?
Betterment is a legal concept that says, even if your plan is missing something, if the owner would have had to pay for that missing item anyhow, they cannot get money from you.
A real life example: A designer’s set of plans showed sanitary sewer extending out 8 feet from the building footprint. It did not show the sewer connecting to the city sewer line. The owner later complained because it had to pay the contractor for a change order for the connection. However, since the owner would have had to pay for the connection regardless, the owner could not recover from the designer for the missing sewer connection. [Had the owner paid a premium due to the fact that the missing connection was discovered during construction, that premium over and above normal costs could have been recoverable.]
Betterment, then, is a defense to a claim of defective plans, because even if the plans are defective, the defect did not cost the owner any additional money.
It can be a tricky concept to explain–even some plaintiff’s lawyers that I’ve dealt with fail to understand the concept. However, it is an important part of many defenses.
Questions? Comments? Ever experienced a “betterment” situation yourself? Share in the comments section, below.
State Construction Office change orders are coded a OR (owner request), CR (contractor request), DE (designer error), DO (designer omission), CC (other) & CC (concealed Condition). A “Betterment” clause is addressed in the construction contract. But, there are circumstance where the Owner is penalized if a piece of equipment or a service is not included in the bid on bid day. This often leads to the discussion as to what the Owner “would have paid” at bid day compared to what the item/service costs at change order time. This sometimes result is an negotiation to establish “fairness” for both parties.
Tony:
Absolutely! There is often a need to establish if there was a premium since it was not bid, but if the Owner would have paid originally, he still needs to pay a reasonable amount for it. Negotiating what is “reasonable,” however, can be a tricky proposition. Thanks for your comment.
To extend the “you should pay for it because you didn’t draw it” argument further, a co-worker once asked an owner “So, if we hadn’t started drawing anything on your shopping center project, we should have just built it for you and paid for it all too?”
Good point. It does become ridiculous when you take the concept to the extreme.