The Difference Between Patent and Latent Ambiguities: Compensation

A client recently came to me regarding ambiguous and conflicting specifications on a transportation project.  As with many contract ambiguities in a construction contract, the resolution of the interpretation meant the difference between a profitable and an unprofitable job for the client.  However, in construction not all ambiguities are treated equally.   Understanding the difference between the two is important in knowing whether to expect compensation for the ambiguity or not.

A contract is ambiguous when it is reasonable susceptible to two different meanings.  Generally, ambiguities in a contract are construed against the drafter.  However, the general rule does not apply on public construction projects.

Courts have created an exception to that general rule when a government construction contract contains an obvious, glaring ambiguity. In such a case the contractor is under a duty to inquire and to try to resolve the problem before entering into the contract. Failure to make such an inquiry prevents the contractor from complaining of the ambiguity after the contract is signed and problems arise.  Therefore, only latent — or non-obvious – ambiguities will be compensable.

The case of PENNDOT v. Mosites Construction Co. shows how this rule works in practice.  There the contractor entered in a contract with PennDOT for the bridge repair work.  The specifications stated that the contractor would be paid as follows:

“This work will be paid for at the contract unit price per pound for Fabricated Structural Steel Repairs, Method 1 and Method 2, which price will include welding, painting, materials, equipment, tools, labor and work incidental thereto.”

However, a drawing sheet indicated that steel weight “[d]oes not include weight of washers, and nuts and bolts, which are incidental.”  Prior to bidding, the contractor did not bring this conflict to PennDOT’s attention.  A dispute arose when PennDOT disputed payments to the contractor that included the nuts, bolts, and washers  in the weight of the steel.

The Board of Claims found in favor the contractor and PennDOT appealed.  The Commonwealth Court affirmed the Board of Claims and found that the ambiguity was not patent and, therefore, the contractor had no duty to bring to the conflict to the attention of PennDOT.

The patent ambiguity rule is especially poignant now because we may see a flood of bridge repair projects being let out to bid in the near future.