Ouch. That’s what a New York judge called a contract to remediate petroleum contamination at 47 gas stations. Sometimes, it’s hard to believe the contracts that get signed.
In this case, Environmental Risk hired subcontractor Science Applications to remediate petroleum contamination at 47 gas stations. Environmental Risk first required its subcontractor to sign a Professional Services Master Agreement. Environmental Risk then required its subcontractor to sign three separate, but basically identical, subcontracts called the Project Specific Scopes of Work, all three of which controlled the clean-up of the 47 sites. So, right from the start, there were four contracts that could apply to the work.
Environmental Risk terminated the contracts with the subcontractor under a termination for convenience clause. The subcontractor pulled off the job and submitted its final pay application. When Environmental Risk refused to pay, the subcontractor filed mechanics liens and filed a breach of contract lawsuit. Environmental Risk then claimed that the subcontractor breached various provisions of the contracts. After a five-week bench trial, the court awarded the subcontractor $800,000 in damages for Environmental Risk’s failure to pay.
During litigation, Environmental Risk argued that the subcontractor 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 of the contract 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 contracts 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 enforce your rights.