Unforeseen Conditions

Clauses often found state (a) the owner accepts no responsibility for subsurface conditions, or, worse, (b) the contractor assumes all liability for all conditions found at the site whether or not they could have been reasonably anticipated. Such clauses ask the contractor to bear responsibility for a condition which both owner and designer [and sometimes CM] in all their preparations did not discover. Those clauses are patently unfair! If the condition is truly unanticipated, then proper compensation should be made. Contractors should be able to bid on reality rather than contingency.

Had the condition been discovered prior to bidding the project and had that information been imparted to bidders, the price for that would have been included in the bids and the owner would have paid for the work. Why then should the owner not pay if it was not discovered until after bid opening? To do less would, in fact, entitle the owner to be unjustly enriched.

One of the topics covered in the document Contract Risk Allocation and Cost Effectiveness is the issue of differing conditions. It is important to note that in this study of both owners and contractors, conclusive evidence was found that inequitable clauses in this regard tend to "increase prices, decrease quality, restrict bid competition, create an adversarial relationship and a situation contractors cannot bear or control and has a negative overall impact on overall project performance."