NASCLA Accredited Commercial General ContractorGeneral RequirementsMedium
A commercial general contractor is managing a multi-story office building project. During the excavation phase, the crew discovers an undocumented underground utility line that was not indicated on the contract drawings. This discovery requires a temporary halt to work and a redesign of a portion of the foundation. Which of the following contract clauses is MOST likely to address the contractor's entitlement to additional time and cost for this unforeseen condition?
- AIndemnification Clause
- BDiffering Site Conditions Clause
- CForce Majeure Clause
- DLiquidated Damages Clause
Show answer & explanationAnswer & explanation
Correct answer: B. Differing Site Conditions Clause
A Differing Site Conditions (DSC) clause is specifically designed to address situations where subsurface or latent physical conditions at the site differ materially from those indicated in the contract documents or from those ordinarily encountered. It provides a mechanism for the contractor to seek adjustments in contract price and time.
Why the other options are wrong
- A. Indemnification clauses deal with liability for damages or losses, not unforeseen site conditions causing project delays/costs.
- C. Force Majeure clauses cover unforeseeable events beyond control (e.g., natural disasters, war), not typically undocumented utilities.
- D. Liquidated Damages clauses specify penalties for late completion, not how to address unforeseen conditions that cause delays.
Differing Site Conditions (DSC) Clause
A contract provision that allows for an adjustment in contract price or time if subsurface or latent physical conditions at the site differ materially from those indicated in the contract documents or from those ordinarily encountered.
- Protects contractors from unknown risks.
- Protects owners from inflated bids due to unknown risks.
- Applies to Type I (differs from documents) and Type II (unusual) conditions.
Memory trick: Contract's hidden map for unexpected ground.