Hot topics in the finishes and interiors sector - unforeseen ground conditions

13 Sep 2017

The general principle under English law is that unless the contract provides otherwise the Contractor carries the risk of adverse ground conditions regardless of whether they were foreseeable at the time of tender. 

At the time of tendering the site information available to the Contractor is very important in determining the risk of unforeseen ground conditions. Any inaccuracies in the site information at tender stage will not necessarily mean an entitlement to claim time and money: whether you are entitled to any extra time or costs for unforeseen ground conditions will depend on what the contract says. English law does not imply a warranty from the Employer that such information is correct. 

Risk allocation

The common law position described above can be amended so that the contract expressly deals with ground conditions by defining what constitutes "ground conditions" and who bears the risk if unforeseen ground conditions are discovered.

It is also usual for an Employer to amend the standard form contract position so that any inaccuracies or errors in any site information will not give rise to any liability on the Employer's part. Watch out for this sort of amendment when you are reviewing the contract. 

JCT suite of contracts

The JCT standard form contract does not generally provide for unforeseen ground conditions. If the contract is silent the Contractor  bears the risk.

Summary

Contractors should be aware that the onus is on them to obtain and understand site information and maintain detailed records of assumptions made regarding ground conditions when preparing their tender.

Sub-contractors should be aware of any risk allocation in the main contract. They should ensure that any risk is not passed down the supply chain by the deletion of clauses which provide compensation or an entitlement to additional time and/or money. 

To avoid potential disputes in the future provisions should be made in the contract at the outset as to how the risk is to be allocated. Any such risk placed on the Contractor should be priced appropriately.