Contract documents

July 11, 2022

Section 3.7.4 of A201-2017 General Conditions of the Contract for Construction is what is commonly known as the “differing site conditions,” or “DSC” clause:

§ 3.7.4 Concealed or Unknown Conditions “If the Contractor encounters conditions at the site that are (1) subsurface or otherwise concealed physical conditions that differ materially from those indicated in the Contract Documents or (2) unknown physical conditions of an unusual nature that differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract Documents, the Contractor shall promptly provide notice to the Owner and the Architect before conditions are disturbed…”

There are two types of differing site conditions, both of which are set forth in the first sentence. The distinction between the two types of DSCs is nuanced and important.

The first type of DSCs are “subsurface or otherwise concealed physical conditions that differ materially from those indicated in the Contract Documents.” A “Type One” DSC is a condition that the contractor encounters that is different than what is shown in the Contract Documents. For example, let’s assume a contractor is planning to excavate for a foundation and the Contract Documents include a geotechnical report showing loose sand in the location where a foundation will be located. If the contractor begins excavation and instead finds boulders, the contractor has encountered a Type One DSC because the conditions encountered are different than what is indicated in the Contract Documents.

The second type of DSCs are “unknown physical conditions of an unusual nature that differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract Documents.” A “Type Two” DSC is a condition that the contractor encounters that is different than what the contractor would expect. To go back to our prior example, let’s assume again that a contractor is planning to excavate for a foundation, but there is no geotechnical report. Let’s further assume that this contractor has excavated many foundations in this area, so they are familiar with the topography and they expect to find loose sand when they dig. If the contractor begins excavation and finds boulders, the contractor has a Type Two DSC, because the conditions encountered are different than what the contractor expected to find.

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.