Latent conditions and the experienced contractor test

Gordon Smith

In modern tenders for major civil engineering works, contractors have little or no opportunity to carry out site investigations, and may not have included any price contingency for latent conditions. If such conditions are encountered, these can result in protracted and technically complex disputes.

Latent condition clauses in construction contracts reallocate the risk for latent conditions from the contractor to the principal by a test which assesses conditions actually encountered against a standard of what could reasonably have been foreseen by an experienced contractor at the time of tender. Gordon discusses this test by reference to case examples, and suggests a number general principles derived from the cases.

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