INNOVATION March-April 2017

Use Them When the owner believes the results of the geotechnical investigations are accurate and reliable, the uncertainty as to subsurface conditions is reduced and incorporating the investigation results into the tender information as representations should reduce risk and cost. If the representations turn out to be wrong, however, the contractor may be able to recover its extra costs on a misrepresentation theory, which typically involves litigation. In the early 20 th century, the US government started to include changed conditions clauses in its contracts as a means of restoring the risk-reduction benefit of the provision of geotechnical investigation results. Typical changed conditions wording would propose a relief mechanism where the actual conditions encountered were: • materially different from those represented (Type I); or • materially different from those reasonably expected (Type II). Similar clauses are now common place in both the US and Canada. 20 According to case law in both countries, realizing recovery for Type I changed condition under a changed conditions clause requires the contractor to prove: 21 • an affirmative representation of the conditions under claim; • a reasonable interpretation of those conditions; • reasonable reliance on those conditions;

The circumstances inform the precise form of disclaimer used, but the general intent is that the contractor should not rely on the disclaimed information. Are they enforceable? In the US, disclaimers have been upheld to avoid a changed condition claim in which they were “upfront and clearly said”. 12 However, in other cases, they have been held to be ineffective where they were inconsistent with changed conditions clauses. 13 Disclaimers appear to be more effective in Canada. 14 They can decisively put the burden on the contractor to perform its own investigation 15 or at least make enquiries for clarification. 16 At other times, however, disclaimers have been held to be ineffective. For example, unless expressed to do so, they do not protect the owner’s consultant. 17 They also may not protect the owner against claims arising from “unusual risks”. 18 Further, general disclaimers do not apply to negate specific obligations. 19 Levelton Consultants Ltd. provided geotechnical engineering when the City of Nanaimo replaced a century-old open-air water reservoir with a 14-million-litre enclosed concrete tank reservoir. P hoto : C ity of n anaimo

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