Your Contract is a Hodgepodge of Conflicting Proposals

Ouch.  That’s what a court called a contract to remediate petroleum contamination at a number of gas stations in New York.  Sometimes, it’s hard to believe the contracts that get signed.

Environmental Risk hired Science Applications to remediate petroleum contamination at 47 gas stations.  Environmental Risk had previously entered into a Professional Services Master Agreement with Science Applications, but also required Science Applications to sign three separate, but basically identical, subcontracts called the Project Specific Scopes of Work.  So, right from the start, there were four contracts that could apply to Science Applications’ work.

Sometime after work started, Environmental Risk terminated the contracts with Science Applications under a termination for convenience clause.  Science Applications pulled off the job and submitted its final pay application.  When Environmental Risk failed to pay, Science Applications filed mechanics liens and filed a breach of contract lawsuit.  Environmental Risk then claimed that Science Applications breached various provisions of the contracts.  After a five week bench trial, the court awarded Science Applications $800,000.

During litigation, Environmental Risk argued that Science Applications failed to meet the stringent clean-up standard contained in the Project Specific Scopes of Work.  Unfortunately for Environmental Risk, the court noted that another section allowed for a completely different clean-up standard, thus allowing for multiple interpretations of the contract.

To make matters worse, the Professional Services Master Agreement contained internally inconsistent clean-up standard provisions. One clause required Science Applications to achieve a “clean-up standard” and then obtain approval from the New York Department of Environmental Conservation.  But the very next provision only required approval from the Department of Environmental Conservation.

Projects can get complicated.  But, the contract should not make them more complicated.  As this case shows, cobbling together a number of contracts may create a hodgepodge of conflicting proposals that will greatly hamper your effort to win your case.