ConstructionPro Week, Volume: Construction Advisor Today - Issue: 85 - 12/09/2010

When Does a Contract Directive Extend an Implied Warrenty?

Construction contracts sometimes include directives, instructions or limitations on how the contractor must accomplish the work. This gives the project owner more control. But it also can create liability if these directives are interpreted to extend an implied warranty to the contractor. A recent case from the federal Armed Services Board is an example.


The Corps of Engineers designated certain haul routes to a job site. A drawing note said the site “shall be accessed only” by those routes. The contractor priced its bid on the assumption it could use those haul routes. After contract award, local authorities enacted an emergency ordinance which effectively blocked the use of a key route. This increased the contractor’s haul costs.


The contractor claimed this was a breach of an implied warranty and a change in the work. The government relied on the boilerplate Permits and Responsibilities clause. The contractor had agreed to abide by all applicable federal, state and local laws or ordinances. The contractor won this argument.


What's your opinion? Should project owners refrain from directives of this nature? Or should they attempt to have it both ways, including the directive and disclaiming any warranty?

To what extent should contractors rely on these directives when pricing the work? I welcome your comments below.


Featured in next week's Construction Claims Advisor . . .

  • Court Blocks Agency Auction of Contract
  • Contractor Allowed to Sue Architect for Disqualification
  • Nonfunctional Aesthetic Feature Enforced Against Sub



The Owner can provide directives on access, supply sources and anything else they deem a requirement for the project. This would be no different in a particular detail that would indicate how to construct a certain portion of the Work. In this case, there may have been reasons for the prescribed haul route. However, as in any change from the bid documents, the Owner is also responsible for changes thay make. I believe the win by the Contractor was justified.

The Owners reliance on boilerplate is backpeddling and they had to have been looking in hindsight to come up with some way to pin it on the contractor. Shame on them!!!


I absolutely agree with the ruling. Many architects use General Conditions as a solution rather than an operating system that it is suppose to be. We train our architects to be right by being right not right by language default.


The local town ordinance tells us they really resent the referenced project. Maybe there were other reasons, like local public road maintenance/repair and that the Corps doesn't pay local towns for permits.


These clauses usually state or are interpreted to mean "The contractor shall abide by all applicable federal, state and local laws or ordinances IN EFFECT AT THE TIME OF THE TENDER". This is in effect a 'differing site condition': I wonder what the Corp's position would have been had the haul routes been closed. due to a washout or other physical cause? I also wonder what the Corp's position would have been had the alternate haul routes resulted in a savings?


The specific rules over the general. The note requiring the only access to/from the site is more specific than boilerplate language requiring the contractor to comply with the agency's general conditions.


To me, the key appears to be the nature of the ordinance. An "emergency" ordinance implies that there was no prior notice and no way to reasonably forsee the route's closure. The closing of the route is basically similar to encountering an un-forseen field condition. the additional costs incurred by the project are no-one's fault and the contractor is due a fair adjustment accordingly. That is what construction contingencies are for.


However, if the contractor had a reasonable expectation that the route would be closed during bidding, (even though it would have been available at that time) he then should not have based his bid on using it. This scenario becomes murkier, as the contractor could have bid the "long" route, "claim to have bid the "short" route and argue that he was due additional compensation when he might not actually have been. The government would not be able to prove what was and was not "known"and would be vulnerable.

On the other hand, if during bidding the government had a reasonable expectation that the route would be closed, they should have removed it from consideration and shame on them if they were not to do so.

Occasionally we need to remind ourselves that contractural requirements must be kept clear and up to date in reference to changing conditions (and codes.) We've all seen specifications copied from one project to another either due to the press of time or complacency. (I saw one fairly recently referencing Y2K compliance). As professionals it is our responsibility to protect our clients from such situations when we can.

Contracts are agreements between parties--entered into at the time of contract--meaning that the contract must be interpreted from the perspective of when it was formed. So it's elementary that losing the haul road changes the contract--and more importantly, changes the agreement fundamentally.


let us also remember that in a bid environment, contractors will price the given route knowing that the specification directs them to use a specific route. Would the owner have allowed for the use of other routes during bid? If that was the intent then the spec should have had a clause stating the use of other approved routes.
No contractor will bid this job using other routes knowing the risk inherent in such situation. If a contractor bid a shorter route which is less costly and is forced to use the only specified route in the bid, he may loose money on the job. If he bid a longer route which is more expensive, he may loose the bid.


In this instance, I fully agree with the verdict. The owner specified a route which for reasons beyong the contractor's doings, did not work. This is an obvious change to the works and should not have even gone to the courts.
So many times, owners are of the opinion that , the contractor claim is often wrong without even analysing the claim. Owner often use the clause " the contractor should have known". This clause is responsible for major claims against clients that any other clause in construction.

Part of the problem is that Engineers and Architects who draft these contracts documents do not want to be blaimed for such errors and will resist any claim by the contractor. Such attitute causes delays and overruns and added legal fees. Architect and Engieers must own up to their mistakes.

That was a very sleazy, and stupid, move by the COE.


I wish they would use our tax money to actually build projects instead of spending it on lawyers to make bogus claims.

Someone should be fired.




WPL Publishing - 5750 Bou Avenue #1712 - Rockville, MD 20852

Phone: (301)765-9525  -  Fax: (301)983-4367

All Content and Design Copyright © 2021 WPL Publishing
About Us

Contact Us

Privacy Policy

My Account