CONSTRUCTION LAW
What
Lies
Beneath
(And Who Pays for It?)
Common issues arising under the
differing site conditions clause
By Anthony LaPlaca, Seyfarth Shaw LLP
For projects that involve excavation or foundation work,
even the most diligent pre-bid site survey may not fully
inform the contractor of what conditions to expect below
the surface. The risks of encountering unforeseen subsurface conditions
are so high that, rather than encouraging bidders to include
large contingencies in their proposals, construction lawyers have
drafted a special clause – the differing site conditions clause. The
purpose of the differing site conditions clause is to allocate the
risk for conflicting, inaccurate or incomplete pre-bid information
furnished by the project owner. While the differing site conditions
clause should, in theory, be a pile driver’s closest ally, recent cases
interpreting this clause highlight some of the challenges to prosecuting
claims under this provision.
The test for differing site conditions has been articulated by
various courts across the country, though the essential elements of
proof are essentially the same in every jurisdiction. The Stuyvesant
Test was developed as the uniform test at the federal level, and is
informative of what issues are most important.1 To prevail on a
claim under the Stuyvesant Test, the contractor has the burden of
proving the following four elements: (1) that the conditions indicated
in the contract differ materially from those encountered at
the site; (2) that the conditions actually encountered were not reasonably
foreseeable to the contractor based on information made
available to it at the time of bidding; (3) that the contractor reasonably
relied upon its interpretation of the documents incorporated
into the contract; and (4) that the contractor was damaged as a
result of the material variation between the expected conditions
and encountered conditions.2 As discussed below, certain repeat
fact patterns have cropped up in litigation over the differing site
conditions clause. Good pile drivers will be wary of these pitfalls
and take steps to mitigate the relevant risks.
1. What are the “contract documents”?
The “contract documents” are typically defined by the general
terms and conditions of contract. Standard practice is to define
the contract documents as the project drawings, specifications,
supplementary conditions of contract; however, some owners may
actually incorporate additional documents within the scope of the
contractor’s obligations, including preliminary investigation and
soil boring reports, surveys, the Request for Proposal itself, written
answers and questions posed during pre-bid meetings, preliminary
construction schedules, the awardee’s bid proposal, or rules and
regulations governing conduct at the work site. The owner may
even incorporate by reference industry standards, geotechnical
reports or other documents not furnished directly to offerors during
the bid stage.
In some cases, judges have found the contractor to be bound
to information merely referenced in the request for proposal, even
if the owner never bothered to provide the relevant documents to
the bidders.3 Thus, contractors should review the RFP with a finetoothed
comb and request copies of any documents incorporated
by reference if they are to have complete and accurate information
about the “conditions indicated in the contract.”
2. How are conflicts among the
contract documents resolved?
Contractors are always required evaluate and synthesize all the
information that falls within the scope of the “contract documents,”
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