Contractor’s liability under unforeseen ground conditions

Abstract

Ground condition is one of the factors that determine the project successfulness. The unforeseen ground condition defined as an un-anticipated physical condition other than weather, climate, or another act of God discovered on site during the works commencement. The worse ground condition makes the greater the risk. These risk surely has a cost, which sometimes can be catastrophic. In most ground conditions, the certainty of ground condition is quite a challenge, even for a geotechnical expert. Under established common law principles, the discovery of any small or large degree of differences (unforeseen ground condition) will not entitle the contractor for any extra cost neither the right to abandon the works. The contractor should ensure and satisfy themself by a proper site investigation to all the risks, before entering into any construction projects. The scope is the cases from common law jurisdictions using traditional lump sum contract that are reported in previous 5 years. Thus, the objectives of this study is to examine the extent of contractor’s liability under unforeseen ground conditions and methods to make the unforeseen become foreseeable (predictable). Due to logistical issues, this study uses a combination of literature review and case law analysis methods. The cases are extracted from Lexis Malaysia online database. The findings of the study are: for the first objective, it is discovered that the contractor is totally liable, unless there is a breach of warranty by the employer, or there is a misstatement or misrepresentation by the employer or engineer; for the second objective, it is found that there are some methods that the contractor may adopt in order to determine and analyse the risks of unforeseen ground conditions: they are, geophysical seismic, borehole, in-situ test, and trial pit. In summary, it may be concluded that, in certain limited exceptions, a contractor in a lump sum contract is totally liable for differing site condition; and there are methods that a contractor may use to evaluate and reduce this risk.