Notice Failure and Waiver Under a 14-Day Clause
A general contractor on a $72M transit station project encountered unforeseen subsurface utilities at month 9, forcing a 3-week work stoppage on the excavation path. The contract requires written notice of a differing site condition within 14 calendar days of discovery, followed by a detailed claim within 30 days. The superintendent noted the utilities in the daily log on Day 1 and verbally told the owner's resident engineer on Day 3. No formal written notice was issued until Day 41, after the stoppage ended. The owner now denies the $2.4M claim for delay and extra work, citing the notice clause. The contractor argues the owner had actual knowledge from Day 1 via the daily log and verbal notice, so no prejudice resulted.
1. Analyze whether the owner can enforce the 14-day notice requirement to deny the claim.
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Enforcement turns on the clause's language and the prejudice/waiver doctrine. Many notice clauses are conditions precedent, and courts will enforce them where the owner can show prejudice from late notice. Here, the owner had actual knowledge on Day 1 (daily log) and Day 3 (verbal notice to the resident engineer). That undercuts a prejudice defense - the owner could investigate and mitigate. However, the formal 30-day detailed claim was also missed. The contractor's strongest argument is substantial compliance plus no prejudice; the owner's strongest argument is strict condition precedent. The likely outcome: the owner may not wholly escape liability for the differing site condition itself, but may be entitled to deny time-related or escalation costs attributable to the late formal claim. Recommend documenting actual knowledge, mitigation efforts, and absence of prejudice.
2. What should the contractor have done differently, and what evidence would strengthen its position now?
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The contractor should have issued written notice within 14 days citing the clause and followed with the detailed claim within 30 days, even if incomplete. Now, it should compile: the Day 1 daily log entry, the Day 3 verbal notice corroborated by the resident engineer's own records or emails, evidence the owner inspected and directed the workaround, records showing the owner did not object to late notice, and proof the owner suffered no prejudice (it had full access, participated in mitigation, and the condition was visible). Also gather any course-of-dealing evidence where the owner previously accepted late notices without objection, which supports waiver. Present a timeline showing actual knowledge predated formal notice and that the owner's conduct waived strict compliance.