LEGALLY SPEAKING “For Information Only” — The Effect of Disclaimers and Other Exculpatory Clauses Anyone who has prepared or reviewed a geotechnical site investigation report or a contract referencing a geotechnical report is familiar with language in these documents disclaiming reliance on or use of the information contained within the report. Such exculpatory language generally falls into one of two categories: (1) disclaimers which qualify or limit the value or reliability of the information itself, and (2) affirmative obligations on the bidder to perform its own site investigation for the purpose of bidding. These provisions commonly take the following forms: • The information is provided for information only and is not part of the contract documents. • The bidder/contractor is obligated to perform its own site investigation and will base its bid on such investigation rather than the information furnished in the geotechnical report provided in the solicitation. • Information from the borings is only an indication of the conditions at the exact locations of the borings; substantial variations in subsurface materials and profiles may exist; and the bidder should not make assumptions about or interpolate between boring locations. • The bidder should be prepared to address conditions not specifically indicated (e.g., groundwater, rock, boulders, etc.). • The owner is not liable or responsible for interpretations the bidder makes about factual information furnished in the geotechnical report. The following is a typical site investigation clause: The contractor acknowledges that it has ascertained the nature and location of the work, has investigated and satisfied itself as to the general and local conditions affecting the work, has satisfied itself as to the character, quality, and quantity of surface and subsur- face materials or obstacles to be encountered, has accepted as adequate the owner’s design, and acknowledges that the owner does not guarantee information provided. It is not uncommon for a contract to contain multiple forms of exculpatory clauses. In fact, many modern construction contracts include site investigation clauses and disclaimers of the information. The purpose of exculpatory clauses is to shift the risk of variations in subsurface conditions to the contractor. For contracts that contain differing site conditions clauses, however, the exculpatory clauses indicated above, while ubiquitous, are of questionable value and limited legal effect. Courts have long and regularly held that general and broad disclaimers do not negate a contractor’s right to rely on representations and indications made by an owner. As early as 1914, the United States Supreme Court held that a contractor is entitled to rely on information contained in specifications without regard to contractual provisions requiring the contractor to perform an independent site investigation. The Supreme Court and courts since that time have held that such general site investigation clauses will not be construed to require an extensive or intrusive subsurface investigation. In 1970, the United State Court of Claims in Foster Const. C.A. & Williams Bros. Co. v. U.S., held: The duty to make an inspection of the site does not negate the changed conditions clause by putting the contractor at peril to discover hidden subsurface conditions or those beyond the limits of an inspection appropriate to the time available. Brian S. Wood Partner Smith, Currie and Hancock Courts have consistently held that a contractor satisfies general site investigation requirements by performing a visual inspection. Recent cases have confirmed and reinforced earlier decisions limiting the legal effect of general disclaimers. In December 2016, the United States Court of Federal Claims, in ASI Constructors, Inc. v. U.S., considered the effect of a disclaimer addressing variations in subsurface the conditions and a contractor’s right to claims for differing site conditions. The disclaimer stated: While the foundation information is representative of subsurface conditions at the respective locations, local variations in the characteristics of the subsurface materials may be anticipated. Local variations which may be encountered include, but are not limited to, classifi- cation and thickness of rock strata, fractures, and other discontinuities in the rock structure, and variation in the soil classifications. Such variations will not be considered as differing materially within the purview of the CONTRACT CLAUSES, paragraph Differing Site Conditions. The government invoked this disclaimer, along with provisions calling for laboratory and field testing and the installation of piezometers, in its motion to dismiss the contractor’s claim for differing site conditions. The court denied the motion and rejected the effect of the disclaimer, holding “[i]t is well-established that, assuming contract documents make affirmative representations about site conditions, ‘broad exculpatory clauses … do not relieve the defendant of liability for DEEP FOUNDATIONS • NOV/DEC 2018 • 121
