The principles being discussed below apply to building and building contracts.
Substantial civil engineering projects operate under different contracts and different customs and principles apply.
Who takes the risk in the site and soils conditions?
It is always open to the parties to decide where risk lies between themselves, in the contract which they make.
However, there are some fundamental common law principles which will apply unless the contract specifically excludes them with clear wording. Some of these principles are surprising, even to people who have operated in the construction industry all their lives.
A contractor undertakes to complete his work according to the contract drawings and design. He warrants or promises his ability to do so. If he cannot then he will be liable in damages.
Halsbury’s Laws of England states:
“It is no excuse for non-performance of a contract to build a house or to construct works upon a particular site that the soil thereof has either a latent or patent defect, rendering the building or constructing impossible. It is the duty of the contractor before tendering to ascertain that it is practicable to execute the work on the site. The builder or contractor on discovering such defects in the soil as will render the construction of the contemplated works difficult or impossible is not entitled to throw up or abandon the contract and thus, if part of the works falls down in consequence of any such defects, the builder or contractor will have to reinstate it or lose his right to recover payment, and be liable in damages for not completing his contract”.
In some situations, where there are variations to the original works, this will let the contractor off the hook, since the contractor, at the time of contracting, had no opportunity to assess the practicability of such then unknown work.
Does the employer warrant the accuracy of site and soils information?
Emphatically, the employer does not ordinarily warrant the accuracy of site and soils information.
Hudson’s Building and Engineering Contracts, a leading “bible” on Construction Law, states
“Not only does an employer not impliedly warrant the practicability of his or his adviser’s design, but it is extremely rare to find that an owner or his architect/engineer will give any express warranty as to the physical state of the site or the sub-soil”.
There are implied obligations on an owner/employer:-
- not to actively misrepresent the physical state of the site;
- to give an adequate degree of undisturbed possession of the site;
- to secure undisturbed possession as against other contractors or persons employed by that owner;
- to give the contractor good title and quiet possession of the site as against third parties.
There are circumstances in which a building owner may unintentionally represent or warrant the condition of the site.
In the case of BacalConstruction (Midlands) Ltd – v – Northampton Development Corporation (1975) 8 B.L.R. 88, the contractor asked questions with regard to the soil conditions. Ultimately, the Quantity Surveyor, acting on behalf of the employer, told the contractor to assume that the ground was good. There were soft spots within the ground. The contractor was entitled to be compensated. The distinction is between the normal situation in which the employer says “I assume that the information provided is correct – it is for you to find out”and the situation in which the contractor is told “you are to assume” certain conditions. Only in the latter situation is the soil information warranted as accurate.
Hudson says “A great weight of authority exists showing that an owner, in the absence of an actionable misrepresentation or deliberate concealment, or of some express warranty, owes no implied duty to a contractor whether of disclosure or otherwise, in contract or in tort, in regard to the pre-existing state of the site”.
The inaccuracies in the site and soil conditions described in a survey can be quite fundamental. Wright Hassall has known cases in which walls were shown as double skin brick walls which turned out to be mere partitions and where steelwork has been shown as connected, where it was unconnected. The contractor (and not the employer) remains responsible for ascertaining these things.
As a broad generalisation, a contractor will have a defence of compliance with specification. In a traditional contract (administered by an architect/contract administrator), the contractor may well be able to say that he is not responsible for the design. However, this can lead to confusion. “Buildability is the province of the builder”. In tendering for work and being accepted, the contractor warrants that he can meet the technological challenge.
The employer does not design the pre-existing soil conditions or pre-existing structure. Frequently, assumptions are made by the design team about site and soils conditions but that does not amount to a warranty of the accuracy of those assumptions.
The Standard Method of Measurement generally requires adequate description of the works to be given. In some circumstances it may be possible to argue, based on the Standard Method of Measurement applying, and the contract stating that departure from it as a variation, that there is an entitlement to additional payment where the works were not fully and accurately described to enable the contractor to know what had to be done. However, it may well be that the works themselves were adequately described – they simply required the contractor to deal with the soils conditions which were, upon excavation, found to exist.
The important thing is for contractors to at least be aware of the risks involved and that the common law places the responsibility for ascertaining the ground conditions and being able to carry out and complete the works in the light of those conditions, on the contractor. Contractors who are not prepared to take these risks must ensure that the contract is amended so that their risk-taking is reduced to an acceptable level which is clearly and definitely described in the contract.
