Many contracts contain subtle but onerous obligations to inspect conditions and documents, shifting the burden of any inconsistencies to the subcontractor. It is extremely important to understand the impact of these provisions both when negotiating and performing a construction project.
Most construction contracts require the contractor to inspect the site prior to executing the contract. For instance: "By signing the Work Authorization Document or by commencing the Work on site, Subcontractor represents and warrants that it has visited and inspected the site of the work and is aware of all site conditions and any inconsistencies or interference that could impact the Work." This provision is intended to undercut potential change orders. It imposes a burden on the contractor to become aware of abnormal site conditions and price for it at the outset. This is a fair requirement. Contractors should perform thorough inspections when putting together a bid. However, this provision should be sharpened to avoid overreach. For instance, where applicable, it should be made clear that destructive testing or inspection has not been performed. Or, where quantities are extrapolated from sampling, it should be made clear that the quantities are only an estimate and the contractor will invoice for actual work performed.
Inspecting Work in Place.
Similarly, a lot contracts require contractors to inspect work of other trades for defects. For example: "Before proceeding with any portion of the Subcontract Work, Subcontractor shall thoroughly and accurately: (a) observe and verify all previous and surrounding work performed by others and determine the location, condition, and correctness of same, to the extent necessary, to assure that the Subcontract Work can be performed as intended; and (b) measure all field conditions relating to the Subcontract Work." In other words, the contractor becomes the guarantor of the quality of the work of other trades.
Failure to inspect and provide notice can be devastating: "Subcontractor shall, at its own expense, make any change in the Subcontract Work, and shall be responsible for the costs to change the subsequent work of others, or any other damages arising out of Subcontractor's failure to give such notice to Contractor." If a latent defect in another trade's work goes unnoticed, the subcontractor could be responsible for all costs to correct.
This goes too far. Certainly it is fair to require a contractor to bring attention to open and obvious defects in the work of others. There should be some ownership to avoid a "not my problem" attitude. But requiring a thorough inspection and forcing a contractor to bear the cost of defects in another trade's work is unfair and oppressive.
Reviewing Contract Documents.
Many contracts require the contractor to review all contract documents for inconsistencies. For instance: "Subcontractor hereby represents and acknowledges that it has carefully reviewed and examined the Subcontract documents and that any and all ambiguities and discrepancies have been clarified and/or corrected." Often, the obligation to review the contract documents is not limited to the subcontract. The prime contract is usually specifically incorporated into the subcontract and must be reviewed. Often, the general contractor does not provide a copy of the prime contract and instead makes it available for review at the onsite office. But it can get even worse. Imagine this obligation: "Subcontractor acknowledges that it is responsible, prior to entering into this Subcontract, to investigate and familiarize itself with ... [buried in a long list] the character and content of all other contracts related to the project." This purportedly requires the contractor to review all plans, specifications and general conditions of all contracts related to the project for any potential inconsistency.
Again, the penalties for failing to observe and report such an inconsistency can be devastating: "If Subcontractor discovers any ambiguity or discrepancy in the Subcontract relating to the Subcontract Work, Subcontractor shall promptly notify of the same in writing. Subcontractor shall at its sole expense make any change in the Subcontract Work, and shall be responsible for the expense of changing the subsequent work of others, necessitated by failure to disclose said ambiguity or discrepancy which Subcontractor discovered or reasonably should have discovered." Practically, this most often results in the denial of an otherwise appropriate change order.
Again, this goes too far. Certainly it is fair to require a subcontractor to raise an alarm if there is an open and obvious inconsistency in the contract documents related to their work. It is not unheard of for a contractor to recognize a problem and see it as an opportunity for lucrative change order work. But to require the contractor to either engage or become a lawyer or a BIM modeler to vet the entire project is an unreasonable burden shift from the general contractor to the subcontractor.