September/October 2022 - 121

BRIAN S. WOOD, PARTNER,
SMITH CURRIE
LEGALLY SPEAKING
The Consequences of Imperfect Notice of
Changes, Delays and Claims
Construction contracts and subcontracts typically include
provisions requiring a contractor or subcontractor to provide
written notice when they suffer delays, discover differing site
conditions, believe required work is a change to the contract
or subcontract, intend to submit a claim, and or encounter
other circumstances affecting performance of the contract or
subcontract. Often, these clauses will require such notice to
be provided within a specified timeframe. For some
circumstances, the clauses require the contractor or
subcontractor to provide written notice before the alleged
changed work proceeds or the conditions are disturbed. For
example, Federal Acquisition Regulation 52.236-2, Differing
Site Conditions, specifies:
(a) The Contractor shall promptly, and before the conditions are
disturbed, give a written notice to the Contracting Officer of -
(1) Subsurface or latent physical conditions at the site which differ
materially from those indicated in this contract; or
(2) Unknown physical conditions at the site, of an unusual
nature, which differ materially from those ordinarily
encountered and generally recognized as inhering in work of the
character provided for in the contract.
The consequences of failing to strictly adhere to contractual
notice provisions vary widely depending upon the law
governing the contract or subcontract. The range of
approaches to enforcement of written notice clauses includes:
1. Strictly enforcement, where failure to provide written
notice within the specified timeframe is fatal (waives the
contractor's rights to the change, claim, etc.).
2. Enforcement of the written notice requirement, but where
leniency is applied to the specified deadline, provided
written notice is furnished in such time as to achieve the
purpose of the timeframe.
3. Relaxation of the written notice requirement, provided
the contractor or subcontractor can establish that the
owner or contractor had actual or constructive knowledge
of condition, delay or claim. Constructive knowledge
means that the circumstances are such that the party
should have known about the condition, delay or change
and is therefore legally presumed to know.
4. Lack of notice excused, provided the contractor or
subcontractor can establish that the owner or contractor
was not prejudiced by the lack of notice. Prejudice can
include the inability to timely consider alternative
designs, approaches, methods, schedules, etc., and or the
inability to contemporaneously track alleged extra work,
resources and costs.
5. Lack of notice excused where it is shown that the parties
established a pattern of inconsistent conduct regarding
notice during the project.
Approaches two through five can be viewed as varying
degrees of a " no harm/no foul " equitable approach to notice.
That is; if the contractor or subcontractor can show that the
missed deadline or lack of written notice imposed no harm or
caused no detriment to the owner or contractor, respectively,
the contractor's or subcontractor's claim survives to be
considered on its merits. In addition to lack of prejudice,
courts have refused to enforce notice provisions strictly for a
variety of reasons, including that the party insisting on notice
acted in bad faith, waived the notice requirements expressly
or by conduct, or required work to be performed on an
emergency basis where notice is not feasible or practicable.
States requiring strict adherence to contractual notice
provisions include Colorado, Connecticut, Georgia, Maryland,
Massachusetts, New York, Pennsylvania, Virginia, Washington
and Wyoming. In these states, written notice is considered a
condition precedent to having a right to a claim and failure to
comply strictly with the notice requirements constitutes a
waiver or forfeiture of claims. In A.H.A. General Const., Inc. v. New
York City Housing Authority, 92 N.Y.2d 20, 677 N.Y.S.2d 9, 699
N.E.2d 368 (1998), the New York Court of Appeals, New York's
highest court, rejected a contractor's claims despite a lower
court's finding of evidence that the housing authority " acted in
bad faith, or otherwise engaged in willful, malicious or grossly
negligent conduct. " The Court of Appeals boiled the issue of bad
faith down to its effect on notice, holding:
Thus, the relevant inquiry is not simply one of the Authority's bad
faith or negligence in the performance of the contract but
additionally whether the alleged misconduct prevented or
hindered respondent's compliance with the notice and reporting
requirements.
DEEP FOUNDATIONS * SEPT/OCT 2022 * 121
September/October 2022

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