Forbearance vs. Change Order

[Voyager]

In effect, what are the differences and similarities between the act of forbearance and the act of issuing a change order?

is the former always passive and the latter active, or can/should forbearance be active, e.g, in writing?

How can one act or the other cause issues later during contract administration?

[Vern Edwards]

1 hour ago, Voyager said:

[W]hat are the differences and similarities between the act of forbearance and the act of issuing a change order?

[I]s the former always passive and the latter active, or can/should forbearance be active, e.g, in writing?

Well, for one thing, a change order orders a change to certain terms of a contract.

Forbearance is not an order to do anything or refrain from doing anything. Black's Law Dictionary, 11th ed., defines it as follows:

Quote

forbearance n. (16c) 1. The act of tolerating or abstaining. 2. The act of refraining from enforcing a right, obligation, or debt. • Strictly speaking, forbearance denotes an intentional negative act, while omission or neglect is an unintentional negative act.

I think the differences are readily apparent.

1 hour ago, Voyager said:

How can one act or the other cause issues later during contract administration?

That question is asking too much. You could write thousands of words in answer. So I'm not going to answer it. But I'll bet someone else will.

[joel hoffman]

2 hours ago, Vern Edwards said:

Well, for one thing, a change order orders a change to certain terms of a contract.

Forbearance is not an order to do anything or refrain from doing anything. Black's Law Dictionary, 11th ed., defines it as follows:

I think the differences are readily apparent.

That question is asking too much. You could write thousands of words in answer. So I'm not going to answer it. But I'll bet someone else will.

I agree. Suggest Voyager research various related topics in the Book: Administration of Government Contracts.

[joel hoffman]

4 hours ago, Voyager said:

is the former always passive and the latter active…?

No.

4 hours ago, Voyager said:

…can/should forbearance be active, e.g, in writing?

Yes. If for no other reason than for effective contract administration, document the action for the record.

[ji20874]

Voyager, Have you recently read the definition of "change order" in FAR 2.101, and looked at the Changes clause in your contract?  To quote from the movie, "You Keep Using That Word, I Do Not Think It Means What You Think It Means."

[C Culham]

7 hours ago, Voyager said:

In effect, what are the differences and similarities between the act of forbearance and the act of issuing a change order?

In the context of which the question is raised, that context being related to a Federal contract, in a Federal contract formed pursuant to the FAR the act of issuing the change order is allowed by the contract or in other words explicit authority.   The act of forbearance is an act not explicitly allowed by the contract but for which a CO may or may not have explicit authority pursuant to their CO/COR delegation. 

8 hours ago, Voyager said:

is the former always passive and the latter active, or can/should forbearance be active, e.g, in writing?

@joel hoffmanhas responded and I believe the response is appropriate.

 

8 hours ago, Voyager said:

How can one act or the other cause issues later during contract administration?

Failure to act with regard to the  explicit authority properly (FAR 1.602-2 as the 30,000foot view) and/or failure to act within ones explicit authority (FAR 1.602-3).  For either the act could lead to a dispute.

 

(As this is the Beginners Forum and if my esteemed counterparts that have replied to the OP believe I am off base I will delete my post.)

 

[joel hoffman]

21 hours ago, Voyager said:

How can one act or the other cause issues later during contract administration?

Chapter 10 of Administration of Government Contracts discusses the implications of forbearance on later actions or circumstances.

In addition, the government generally should not issue a unilateral modification under the Changes clause to extend a deliverable period pursuant to forbearance due to what would otherwise amount to an unexcusable delay (contractor caused) . It should be a bilateral, noncompensable mod. The government may well need to reserve its rights concerning known or unknown cost or time impacts to the other work. These types of delays are described in detail in other sections in Administration of Government Contracts.

If the delays are excusable (e.g., not the fault of and beyond the control of the prime and its subs or suppliers or the delays are concurrent with government caused delays) and are non compensable, a mod for time extension or change in a deliverable date would be appropriate under the Defaults clause. Forbearance wouldn’t be applicable in that situation. These types of delays are also described in detail in Administration of Government Contracts.

I mention this because Voyager appears to be a beginner,  plus did not describe the causes or reasons for extending the deliverable schedule.

The above general comments depend upon the specific causes and circumstances.
 

[Krimz]

Vern & Joel probably have better feedback, so I'll defer to them for the "right" answer, but this my personal experience:

My office has a forbearance letter template in which we state we will abstain from terminating the contract (as is our right at this point since the POP has ended), but we do not forfeit that right.  If we were to issue a modification extending the period of performance, the contractor would technically not be breach of contract, so we would forfeit the Government's right to terminate at a later date.

We forbear our right to terminate, allow the contractor to continue performance, but we will terminate the contract if the contractor is unable to complete the work.  We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

[Vern Edwards]

@KrimzI don't have better feedback than that. That's excellent feedback.

[C Culham]

59 minutes ago, Krimz said:

Vern & Joel probably have better feedback, so I'll defer to them for the "right" answer, but this my personal experience:

My office has a forbearance letter template in which we state we will abstain from terminating the contract (as is our right at this point since the POP has ended), but we do not forfeit that right.  If we were to issue a modification extending the period of performance, the contractor would technically not be breach of contract, so we would forfeit the Government's right to terminate at a later date.

We forbear our right to terminate, allow the contractor to continue performance, but we will terminate the contract if the contractor is unable to complete the work.  We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

Letter?   I am just wondering about unilateral versus bilateral.   Would not it need to be bilateral where the contractor promises to complete in light of the forbearance?    

Turner Construction Co. v. General Services Administration, GSBCA 15502, et al “[n]either the benefit nor detriment need be actual; it is a sufficient legal detriment if the promisee agrees to perform any act, no matter how slight, and so long as he does so at the request of the promisor and in exchange for the promise. The term ‘benefit’ means the receipt as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive.”

 

[Voyager]

@Krimz

9 hours ago, Krimz said:

We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

I am a beginner to many contract law concepts, forbearance being one of them.  From your post, it sounds like you wouldn’t issue this letter to forbear your right to a single missed deliverable, let’s say for one of 50 deliverables each with due dates stated in the contract.  What action would you take instead?

@C Culham

After browsing a bit on the following thread:

I am wondering if someone in this thread can confirm or correct my following lessons learned:

1. In a forbearance occurrence, the Government party that was harmed becomes the offeror, and the offending Contractor party accepts the “offer” of a revised due date.

2. Consideration is gained by the offeror (the Government) when the offending party promises to actually perform.

3. Because the act of forbearance is extra-contractual in that the Changes clause is not quite applicable, and use of the Termination for Default/Cause clause is only being threatened, the CO’s written letter providing the offer of a revised due date should include a signature block for the Contractor’s authorized signatory to accept it bilaterally. 

[Vern Edwards]

9 hours ago, C Culham said:

Letter?   I am just wondering about unilateral versus bilateral.   Would not it need to be bilateral where the contractor promises to complete in light of the forbearance?    

Turner Construction Co. v. General Services Administration, GSBCA 15502, et al “[n]either the benefit nor detriment need be actual; it is a sufficient legal detriment if the promisee agrees to perform any act, no matter how slight, and so long as he does so at the request of the promisor and in exchange for the promise. The term ‘benefit’ means the receipt as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive.”

Turner involved five separate decisions, all bearing the docket number GSBCA 15502. The one that includes the above quote is 05-1 BCA ¶ 32924, GSBCA No. 15502, March 18, 2005.

Instead of attending to what's starting to happen here, why not go to a library and read a treatise like Williston on Contracts, 4th, § 7.44, Forbearance or promise of forbearance:

Quote

Just as a promisor may make an agreement for acts or promises to act, so too may it bargain for forbearances or promises to forbear. Forbearance from exercising a right or doing an act which one has a right to do is legal consideration. As the New York Court of Appeals pointed out more than a century ago in a leading case, “Consideration means not so much that one party is profiting as that the other abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first.” While forbearance as consideration often takes the form of forbearance from litigation, there are many other circumstances which give rise to a relinquishment of rights constituting legal consideration.

Before any act or forbearance, or promise to act or forbear, can constitute consideration, it must be bargained for and given in exchange for the promise. Mere forbearance to exercise a legal right, without any request to forbear or circumstances from which an agreement to forbear may be implied, is not consideration such as which will support a promise. However, where there is a request to forbear, mere forbearance without a counterpromise is usually sufficient, since a unilateral agreement will result and is as binding as a bilateral agreement.

Where an agreement to forbear is deemed necessary, according to some authority the agreement may be implied. Actual forbearance is generally evidence of an agreement to forbear, and when viewed in connection with other facts and circumstances relating to the promise, an implied promise to forbear may be established which will be deemed to supply the necessary consideration.

Williston includes an extended discussion of forbearance.

[C Culham]

9 hours ago, Vern Edwards said:

why not go to a library

Thanks I will.   @VoyagerI am passing the suggestion on to you as well.   

9 hours ago, Vern Edwards said:

mere forbearance without a counterpromise is usually sufficient, since a unilateral agreement will result and is as binding as a bilateral agreement.

As I read the reference and beyond I will be most interested in how the  "usually" is applied to Federal government contracts written pursuant to the FAR.   Contracts that have FAR 52.212-4 especially.

[Vern Edwards]

Carl, where did I say that? I don't see it in this thread. What's the context? Were they my own words or was I quoting something?

Assuming I did say it, are you saying it's wrong?

[C Culham]

 

11 hours ago, Voyager said:

I am a beginner to many contract law concepts, forbearance being one of them.

I get Vern's point about "attending to whats starting to happen" I will say no more.  Before I close here some case law references I found that are specific to Federal contracting.   Like me maybe they will lead you to reading more....

https://casetext.com/case/devito-v-united-states

https://www.asbca.mil/Decisions/2018/59089 REDACTED Bulova Technologies Ordnance DECISION 11.9.18_Redacted.pdf

[C Culham]

Just now, Vern Edwards said:

Carl, where did I say that? I don't see it in this thread. What's the context?

You quoted it from the treatise in part.  I created the confusion by not capturing it correctly so the quote via the Forum tool was attributed to you so to speak.   I apologize.

[Vern Edwards]

21 minutes ago, C Culham said:

You quoted it from the treatise in part.  I created the confusion by not capturing it correctly so the quote via the Forum tool was attributed to you so to speak.   I apologize.

Carl, No problem.

But would you mind telling us what we are supposed to learn from that 57-page Bulova decision to which you just provided a link. The word forbearance appears only once, on page 51, in a quote from a different decision.

I'm not sure what point you are trying to make. If I understood I might agree with it.

[Vern Edwards]

Carl, I have checked both of the cases you cited, DeVito and Bulova. In both cases the word forbearance appears only once.

In Devito:

Quote

 

The necessary elements of an election by the non-defaulting party to waive default in delivery under a contract are (1) failure to terminate within a reasonable time after the default under circumstances indicating forbearance, and (2) reliance by the contractor on the failure to terminate and continued performance by him under the contract, with the Government's knowledge and implied or express consent.

 

In Bulova:

Quote

(1) [F]ailure to terminate within a reasonable time after the default under circumstances indicating forbearance, and 52 (2) reliance by the contractor on the failure to terminate and continued performance by him under the contract, with the Government’s knowledge and implied or express consent.

I don't understand the point you are making by citing those cases.

[C Culham]

8 minutes ago, Vern Edwards said:

But would you mind telling us what we are supposed to learn

 

Just now, Vern Edwards said:

I don't understand the point you are making by citing those cases.

All present a position of the courts (a term I am using in general) as to what constitutes forbearance with regard to Federal contracts awarded pursuant to the FAR.

All pointing to things like express or implied, unilateral or bilateral in hopes that a read of them by Voyager will enhance an understanding of the similarities and differences between forbearance and a change order.  Like every thing connected to Federal contracting there is a general view and then there are the facts of a instant procurement.

[Vern Edwards]

Thanks, Carl.

[Voyager]

Thanks to you both.  I will continue my education personally, as suggested.

[Vern Edwards]

14 hours ago, Voyager said:

I am a beginner to many contract law concepts...

Go to Amazon.com, buy a copy of Contracts (2014), by Perillo, and read in it.

[Krimz]

On 11/2/2022 at 8:56 PM, Voyager said:

@Krimz

I am a beginner to many contract law concepts, forbearance being one of them.  From your post, it sounds like you wouldn’t issue this letter to forbear your right to a single missed deliverable, let’s say for one of 50 deliverables each with due dates stated in the contract.  What action would you take instead?

@C Culham

 

Hi @Voyager,

No clue how I missed these replies, but apologies for the delay.  I've never been in the situation you're describing, but whether it's a missed 1/1 delivery or 1/50 delivery, the contractor is in breach of contract and therefore at risk of being terminated.  Whether it's in your best interest to offer to allow contractor to proceed in forbearance is up to CO & the circumstances.  Forbearance is both the carrot & the stick.

On 11/2/2022 at 12:48 PM, C Culham said:

Letter?   I am just wondering about unilateral versus bilateral.   Would not it need to be bilateral where the contractor promises to complete in light of the forbearance?    

Turner Construction Co. v. General Services Administration, GSBCA 15502, et al “[n]either the benefit nor detriment need be actual; it is a sufficient legal detriment if the promisee agrees to perform any act, no matter how slight, and so long as he does so at the request of the promisor and in exchange for the promise. The term ‘benefit’ means the receipt as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive.”

 

Hi @C Culham We issue the letter, sans mod.  We do not modify the contract since the only reason to modify the contract would be to extend the POP, which would effectively excuse the contractor of their late performance and defeat the purpose of forbearance.  I guess the contractor need not perform in forbearance, but the only other option is termination.  We're not in this situation very often, but we discuss w/ the contractor when we are.  They're typically happy to receive a second chance vice a termination for ktr breach.

[C Culham]

11 hours ago, Krimz said:

We issue the letter, sans mod. 

Letter or mod, which I did not state it needed to be,  I still think bilateral.  A letter can be bilateral.  Contractor you agree to perform without extension to the POP, we agree not to terminate if you do so.  I could see more meat to it but that is my thought.  If a letter, with a place for the contractor to sign and return.

[Krimz]

1 hour ago, C Culham said:

Letter or mod, which I did not state it needed to be,  I still think bilateral.  A letter can be bilateral.  Contractor you agree to perform without extension to the POP, we agree not to terminate if you do so.  I could see more meat to it but that is my thought.  If a letter, with a place for the contractor to sign and return.

I see what you're saying.  There is a place for contractor sig, but we've never had one refuse.