Arizona Contractors Confront Cardinal Change

by Snell & Wilmer

The Cardinal Change Doctrine

The “cardinal change doctrine” is a legal theory pursuant to which a contractor who is presented excessive, cumulative or otherwise material contract change orders has the right to terminate the contract and/or recover damages from the owner.[1] The basic concept is that if the owner (i) significantly changes the magnitude of the work to be performed; (ii) deviates from the original design to procure a completely different item; (iii) drastically alters the quality, character, nature or type of work contemplated by the original contract; or (iv) amends the work so that the new estimate greatly exceeds the original contract estimate;[2] the owner has, for all practical purposes, materially breached the contract, in which case the contractor has the right to terminate the contract and/or recover damages.

Federal Contracts

The cardinal change doctrine is well-established under federal law, and Arizona contractors should be aware of the doctrine to the extent that they are working under federal contracts. To begin with, a federal contract is subject to federal procurement contract laws,[3] and will therefore necessarily include a “changes clause” permitting the government’s contracting officer to make unilateral changes to the contract, provided that such changes are contemplated within the general scope of the contract.[4] Once the contracting officer issues a change order,[5] the contractor is then required to perform under the amended contract, whether or not it agrees with the contracting officer’s modifications. Under this scenario, the only recourse for the contractor is to file a claim for an equitable adjustment with the contracting officer pursuant to procedures outlined in federal regulations.[6] However, if the contracting officer imposes obligations on a contractor far exceeding the work contemplated by the contract, such as ordering a drastic modification in the performance required by the contract, the order is considered a cardinal change that constitutes a material breach of the contract.[7] Under such cardinal change, any contractually based procedural requirements or damage limitations are inapplicable and the contractor may pursue common law termination and/or damage remedies against the owner.[8]

Arizona Public and Private Contracts

In the absence of controlling state authority, Arizona courts will look for guidance in public contract law to the federal court of claims and federal board of contract appeals.[9] Therefore, in light of New Pueblo and the law discussed below, while Arizona courts have not expressly applied the “cardinal change doctrine,” to public or private contracts, per se; Arizona courts may follow the cardinal change doctrine and permit recovery through the common law theory of “quantum meruit.” To recover damages under quantum meruit, a contractor must prove that (i) the owner was unjustly enriched at the expense of the contractor; (ii) the contractor performed services benefitting the owner; and (iii) the contractor conferred the benefit under circumstances rendering the owner’s retention of the benefit inequitable.[10] Quantum meruit damages are measured by the value of the services to the owner[11] and are recoverable even under a void public contract.[12]       

The quantum meruit theory allows the contractor to recover for the fair value of its work even though it might otherwise fall outside of the contract payment terms due to the cardinal change. In essence, the court views the parties as having formed a new, “implied contract,” under which the contractor is entitled to recover the fair value of its performed services. The Arizona Supreme Court applied the foregoing principle to a county contract in Greenlee County v. Webster in 1923,[13] reasoning that the contractor in the case should have brought an action in quantum meruit instead of breach of contract. The court explained that because the contractor’s performance pursuant to the county’s numerous change orders ultimately shifted the contractor’s work outside of the scope of the original contract’s payment terms, the Court was precluded from affording the contractor recovery under a breach of contract theory but may have done so under quantum meruit. Further with respect to public contracts, Arizona Revised Statutes affirm that “the principles of law and equity, including . . . the common law of contracts as applied in this state. . . supplement the provisions of [the Arizona Procurement Code (APC)].”[14]


Since the doctrine of cardinal change has not been squarely addressed yet by Arizona courts, owners and contractors should consult with knowledgeable construction attorneys about their options when faced with the issue of whether or not a cardinal change has occurred.  


[1] See Philip L. Bruner & Patrick J. O’Connor, Jr, Bruner & O’Connor Construction Law § 4:13.

[2] Becho, Inc. v. United States, 47 Fed. Cl. 595, 601 (Fed. Cl. 2000).

[3] See Federal Acquisition Regulation (“FAR”), Code of Federal Regulations, Title 48, Chapter 1.

[4] 48 C.F.R. § 43.201.

[5] Id.

[6] 48 C.F.R. § 43.204.

[7] Becho, 47 Fed. Cl. at 600-01.

[8] See Philip L. Bruner & Patrick J. O’Connor, Jr, Bruner & O’Connor Construction Law § 4:13.

[9] New Pueblo Constructors, Inc. v. State, 144 Ariz. 95, 101, 696 P.2d 185, 191 (1985).

[10] W. Corr. Grp., Inc. v. Tierney, 208 Ariz. 583, 590, 96 P.3d 1070, 1077 (Ct. App. 2004).

[11] Spitalny v. Tanner Const. Co., 75 Ariz. 192, 200, 254 P.2d 440, 446 (1953) (overruled in part on other grounds).

[12] Western Corrections Group, 208 Ariz. at 590, 96 P.3d at 1077.

[13] 25 Ariz. 183, 199 (1923).

[14] A.R.S. § 41-2504.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Snell & Wilmer | Attorney Advertising

Written by:

Snell & Wilmer

Snell & Wilmer on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.