A contract to construct any project at a fixed price by a certain date involves many risks. These risks include whether the work can be performed at the agreed price, future price increases, weather conditions during the course of construction, competency of the contractor's management, supervisors and workers, unforeseen subsurface conditions. This latter risk is particularly significant in the construction of highways and other transportation facilities which involve excavation and/or the construction of embankments, borrow and other material sources, construction of foundations for bridges and other structures, tunnels, etc. Subsurface conditions are in fact the greatest risk in many transportation construction projects. The courts have traditionally held that, in the absence of any mitigating circumstances, the contractor assumes the risk of any cost increases due to any unforeseen or unusual subsurface conditions in fixed priced construction projects. There are several exceptions to this rule, however. If the owner withholds or misrepresents information about subsurface conditions, the owner is liable for the constructor's increased costs. The owner is also liable if the plans and specifications provided to the bidder prove inadequate. This article examines several state court rulings pertaining to these exceptions. In the case of the Differing Site Condition Clause, the Government and some states assume the risk of subsurface conditions differing materially from those indicated in the contract or (in the absence of any indications) those ordinarily encountered in the area. The article reviews court rulings interpreting the clause.

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Filing Info

  • Accession Number: 00388752
  • Record Type: Publication
  • Files: TRIS, TRB
  • Created Date: Oct 30 1984 12:00AM