by Quenda Behler
You're looking at an invitation to bid, complete with plans
and specs. It would be a big job for you — very
Great! Go for it, but don't lay in the champagne just yet.
There are risks involved, one of which is that since you didn't
put those plans and specs together, you can't be sure they're
complete and correct.
Here's a horrifying example: You are asked to bid on a
renovation project that involves turning an old department
store into residential lofts, and you win the bid. But after
you get started, you discover foundation problems that weren't
on the plans. Apparently, when the foundation was built the mix
was incorrect, and it does not meet current standards.
So you contact the customer and say, "Hey, your specs didn't
say anything about footing problems. Since we'll have to fix
them, it's going to cost you more." The customer says, "What do
you mean, cost us? You bid at that price, so you're stuck with
"That's what you think," you say. "There's a changed or hidden
conditions clause in the contract that says the contractor gets
a change order with accompanying price adjustments when changed
or hidden conditions turn up."
But will that clause actually save you? After all, nothing has
really changed; the bad concrete was there long before the
contract was signed. How about "hidden"? Would the reference to
hidden conditions save you?
Let's start with changed conditions. Here's the legal
standard: To get some adjustment in the contract price for
changed conditions, those conditions don't have to physically
change. The conditions are considered changed if they are not
what the parties thought they were when they made the
You certainly didn't have bad concrete in mind when you signed
the contract. But — and there's always a "but"
— you do need to understand that what you "knew" when
you signed the contract includes what you should have known,
and what you would have discovered if you had inspected the job
That's right: It's not enough to rely on the customer's plans
and specs. You need to do some checking yourself. The courts
say that if you could have investigated and discovered the
problem, you should have. If going onto the site, taking soil
borings, doing a little digging, and banging on a few walls
would have revealed the problem, then that's what you should
There's even a court case that says if there were archives (or
original plans) for the building and you could have discovered
the problem by reading them, then you should have read
The same thing goes for hidden conditions. They are not
considered hidden if, with some effort, you could have found
Let's return to our example, the store-renovation project: It
may be true that you didn't know about that bad concrete and it
was hidden from sight — but if you could have found
out about it with a little investigating, the bad concrete
won't be considered a changed or hidden condition.
My point here is not that you need to start filling out those
bankruptcy petitions; I am simply pointing out that the changed
and hidden conditions clause may be more complicated than you
In the case of the store-renovation project, if I were your
attorney there are two issues I would be scrutinizing.
First, how much investigating is enough? The standard used is
"what is considered reasonable practice in the trade." If you
wouldn't have discovered the problem by investigating in the
way that people in the construction trade typically investigate
— people in your area who do what you do —
then the condition qualifies as hidden or changed.
Second, what should the people who prepared the bid have
known? And what should they have told you if they knew
— or had reason to know — that there might be
a concrete problem? We in the legal trade call the withholding
of information under those kinds of circumstances fraud, or
sometimes failure to disclose.
Whatever we call it, your customer isn't allowed to lure you
in and trap you into a bad bid. Not knowingly, at any rate. The
good news is that customers are subject to the same standard
that you are: What matters is not what they actually knew, but
what they should have known.
So if you're handed specs and plans and invited to bid, don't
sign anything until you've gone out on the job site and
thoroughly investigated the proposal. That's something you
should do anyway — putting together your bid without
ever leaving your office isn't good business. You should always
find out what's actually on the ground, and whether those plans
and specs are accurate.
Quenda Behler Story, author of The
Contractor's Plain-English Legal Guide, has practiced and
taught law for more than 25 years.