## Facts

- A contractor and a motel owner executed a written construction contract requiring written, signed change orders for extra work and written requests for time extensions to the architect.
- Construction specifications required a stated proportion of reinforcing substance in masonry walls; a masonry subcontractor failed to include the specified proportion.
- After the defect was discovered, the owner withheld a progress payment and threatened to remove the contractor, leading the contractor to sign a supplemental agreement addressing the defect and delay terms.
- The supplemental agreement required, among other terms, a \$5,000 payment by the contractor, performance of certain additional work without extra charge, and liquidated-delay provisions for a defined period with an extended completion date to July 1, 1962.
- The owner requested and accepted numerous items of extra work, with awareness they increased costs, but without obtaining written change orders as the contract required.
- The project was substantially completed on September 1, 1962.
- The contractor (through a court-appointed receiver) sued in equity seeking, among other relief, payment for work under the contracts and extras; the owner denied liability, asserted setoff for uncompleted work, and counterclaimed for delay damages.
- The chancellor denied rescission-type relief and certain damages claims, rejected the owner’s setoff and delay counterclaim, and entered a money decree for the contractor for the unpaid contract balance and extras plus interest.
- The owner appealed.

## Issues

1. Whether alleged evidence fabrication by a corporate officer required denial of equitable relief under the unclean-hands doctrine or disqualification of the officer as a witness.
2. Whether the contractor could recover for extra work performed without written change orders when the contract made written change orders a condition of payment.
3. Whether a construction contract stating it can be modified only in writing may nonetheless be modified by oral agreement or by the parties’ conduct.
4. Whether the owner was entitled to delay damages as an offset or counterclaim in light of the supplemental agreement extending time and addressing delay.
5. Whether the chancellor erred in declining to set aside a related real-estate conveyance under the Uniform Fraudulent Conveyance Act and in declining to void the supplemental agreement for fraud or duress.

## Decision

- The Supreme Court of Pennsylvania largely affirmed the final decree requiring the owner to pay \$127,759.54 plus interest for the unpaid contract balance and extras.
- The court held the unclean-hands doctrine did not bar recovery where the challenged misconduct was attributed to an agent rather than the corporate suitor, and denial of relief would harm innocent creditors.
- The court held the challenged officer was not disqualified as a witness on the asserted ground; credibility determinations remained for the chancellor.
- The court held the owner was liable for extra work despite the absence of written change orders because the owner’s conduct and oral directions supported waiver/modification.
- The court upheld rejection of the owner’s principal delay-based defenses and counterclaims in light of the supplemental agreement and the parties’ conduct.
- The court affirmed refusal to set aside the conveyance and refusal to declare the supplemental agreement void.

## Legal Principles

- Unclean hands in equity focuses on the suitor’s personal misconduct; an agent’s misconduct does not automatically bar relief, especially where denial would unfairly affect innocent third parties such as creditors.
- In civil cases, a witness is not rendered incompetent solely because of alleged evidence fabrication; credibility is for the factfinder.
- A written construction contract may be modified orally even if it contains a clause requiring modifications to be in writing.
- An owner may be obligated to pay for extra work orally ordered and knowingly accepted, notwithstanding a contractual requirement of written change orders, where the owner’s conduct waives or bars enforcement of that condition.
- Enforcement of a “written-only modification” or written-change-order condition may be precluded by equitable considerations when a party’s conduct induces noncompliance and the party accepts the benefit of the work.

## Conclusion

The court sustained an award for unpaid contract amounts and extras, holding that the owner’s conduct and oral directives waived strict compliance with written change-order and written-modification clauses, while also limiting unclean-hands and witness-disqualification arguments based on agent misconduct in an equity action.


Universal Builders, Inc. v. Moon Motor Lodge, Inc., 430 Pa. 550, 244 A.2d 10 (1968)