Halsbury's Laws of England states: "It is no excuse for non-performance of a contract to construct works on a particular site that the soil thereof has either a latent or patent defect, rendering the constructing impossible. It is the duty of the contractor before tendering to ascertain that it is practicable to execute the work on the site." And Keating on Building Contracts states: "The contractor in such a case cannot rely on his ignorance of such matters as defects in the soil, nor on any implied warranty by the employer, that the bills of quantities, plans and specification are accurate."
Both statements illustrate the high point of the employer's position and the low point of the contractor – but they require some qualification.
First, the wording of the tender may show the employer intends to warrant the accuracy and correctness of soil surveys. In the case of Bacal Construction (Midlands) vs The Northampton Development Corporation, Bacal, the contractor, had been provided with a soil survey when tendering. A letter from the quantity surveyor then required the soil conditions disclosed be assumed by the contractor in relation to six foundation blocks he was to design and price.
No warning was given of the presence of Tufa, a spongy soft material, and the foundations had to be redesigned. The Court of Appeal upheld the decision of the trial judge that the employer had warranted that the soil information was accurate.
The Bacal case does not sit easily with the idea that there is no implied warranty given by the employer in relation to tender information. It highlights the distinction between an employer who says certain soil conditions are assumed and leaves it to the contractor to investigate the actual conditions, and an employer who requires the contractor to assume certain conditions when submitting a tender or producing a design.
My second qualification involves the employer's duties and liabilities under the Misrepresentation Act 1967 if statements were made that induced the contractor to enter into the contract. Misrepresentation may entitle the contractor to compensation or even to set aside the contract. Moreover, a warning by the employer that it does not guarantee the accuracy of tender details and that the tenderer must make his own inspection does not necessarily prevent misrepresentation.
Third, a contractor may have a claim in negligent misstatement (a remedy in tort, outside the contract) if there is a close relationship that creates a duty on the part of the person making the statement towards the person receiving it.
Finally, the contract may expressly place responsibility on the employer to describe soil conditions and to deal separately, in the bills of quantities, with the excavation of rock.
This is what happened in C Bryant & Sons Limited vs Birmingham Hospital Saturday Fund in 1938. The standard method of measurement on which the contract bills were prepared required, where practicable, that the nature of the soil be described and excavation in rock be given separately. The architect knew of the presence of rock, but the bills and plans did not refer to it. The contractor was entitled to the excavation of rock as an extra.
Frankly, the legal position is not satisfactory. It is confusing to have the Court of Appeal upholding an implied warranty by the employer of the accuracy of soil information in the Bacal case, while the leading law texts, at first glance, state no implied warranty is given by the employer.
However, a summary of the law is as follows:
- The mere inclusion of soil information in the invitation to tender or contract schedules does not mean the employer warrants its accuracy.
- Where the employer instructs the contractor to design and build on the basis that it must assume soil information is correct, an implied warranty by the employer has been found to exist.
- There may be a misrepresentation by the employer of soil conditions, entitling a contractor to rescind the contract or to compensation.
- There may be a negligent misstatement by an employer or his design team that carries a legal remedy.
Philip Harris is a solicitor and head of construction at Leamington Spa-based law firm Wright Hassall.