By: Lester Gulitz Published: January 2009

Contract Document Ambiguities Heap More Risk On Contractors

When will an ambiguity in a public owner’s contract documents not support a contractor’s claim for extra work? Answer, (according to the New York Court of Appeals) is when the ambiguity is obvious (patent) on the face of the document, and the contractor did not follow the contract and seek clarification prior to bidding. 
 
Here is what happened. The Contractor was awarded a contract with New York City to remove lead-based paint from the Queensboro Bridge. The Contractor was required to install scaffolding platforms above the inner vehicle roadways and outer pedestrian roadway. Drawing No. 26R contained Note 5 stating that, “minimum vertical clearance of 14 feet shall be maintained above all roadways.” The drawing also contained arrows pointing Note 5 to the area of the inner vehicle roadways. Note 7 on the same drawing stated that protective shielding, platforms and containments shall be installed in accordance with approved shop drawings, to the satisfaction of the contractor’s engineer. The arrows associated with Note 7 pointed to the outer pedestrian roadways. The contractor interpreted Note 7 as being applicable to the outer pedestrian roadway. There was no problem with providing 14 feet of clearance over the inner roadways, as the inner 
roadways were several feet lower than the outer roadway. However, existing power cables located over the outer roadways limited clearance of the platforms over the outer roadways to between 8 feet 5 inches and 12 feet. In order to install work platforms with a minimum 14 foot clearance over the outer roadways, the contractor was required to remove and relocate the power cables – additional work, for which the contractor wanted to be paid. The City denied the Contractor’s claim for payment whereupon the Contractor, following the dispute provisions in the contract, took the dispute to the Contract Dispute Resolution Board (CDRB). 
 
The City argued to the CDRB that the drawings were ambiguous on their face. This, said the City, triggered a contractual provision that required the Contractor to seek clarification of the ambiguity before it submitted its bid. The Contractor having failed to do so, said the City, its claim was barred. The CDRB agreed stating that the City “produced a confusing and contradictory set of drawings” and that, “the conflict between the drawing and the notes indeed created an ambiguity in the contract.” Accordingly, the CDRB concluded, the Contractor was not entitled to claim for additional work, because it failed to comply with the contract. 
 
The Contractor then sought a review of the CDRB’s determination by the Supreme Court in an Article 78 proceeding. 1 The Court noted that, in undertaking its review, it may not substitute its judgment for that of the CDRB, and that it must uphold the CDRB’s determination if the CDRB had a rational basis for it. As you will have guessed, the Supreme Court concluded that the CDRB had a rational basis for its determination. It held that the drawing and notes were confusing and in conflict, which triggered the “seek clarification before bidding” contract clause. “Where a contract requires a contractor to raise any ambiguities or any questions about the requirements of the job with the City before submission of its bid and the contractor fails to do so… the contractor will be bound by the City’s interpretation of the contract.” 

 
The Contractor then appealed to the Appellate Division. There, by a 3 to 2 majority, the appellate court upheld the lower court’s dismissal of the Contractor’s Article 78 petition.The Contractor tried again in the Court of Appeals 3, but it fared no better, and its claim stayed dismissed. 

The result of the Contractor’s travels through the state judicial system may have negative repercussions to the entire construction community. By breathing new life into what was previously a relatively innocuous provision in the instructions to bidders, public owners may take a harder line about paying extra work claims arising as a result of patently ambiguous contract documents, where clarification was not sought prior to bidding. 

 1
 L & L Painting Co., Inc. v. Contract Dispute Resolution Board of the City of New York, 2008 WL 226979 
(N.Y. Sup.) 
2 Id. at 68 A.D. 3d 594, 892 N.Y.S.2d 55 (1st Dept. 2009)  
3
 Id. at 2010 WL 1704644 (Ct. of Appeals, 4/29/10) 

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