1. GENERAL. This clause caps the change from the old practice of putting all the risk on the contractor. It is important, not only in a pure lump sum contract but also in a measure and value or quantities form, because the courts have applied the lump sum principle to engineering contracts as a whole and to individual rates (p. 27) without allowing for the fact that it is often not possible for the contractor to estimate the risks in advance.

The clause is, however, carefully limited, and it should not be read by the contractor, the engineer or an arbitrator as giving carte blanche to claim or award extra payment whenever the contractor loses out on a calculated risk (p. 436).

2. “DURING THE EXECUTION OF THE WORKS”. It is arguable that this phrase does not cover the execution of maintenance work under cls. 49 and 50. Clearly the engineer may not act under cl. 39 or order extra work (p. 175) in the maintenance period, and a strong contrast is drawn between the execution or construction and the maintenance of the works in cls. 13, 15 and 62. See also the Tender and Agreement and cls. 16 and 18, but note cl. 7.

“Works” now include all temporary works, by the definition in cl. 1 (1) (l), subject to the discussion on p. 29.

3. “PHYSICAL CONDITIONS…OR ARTIFICIAL OBSTRUCTIONS”. The contractor has a remedy for these types of unforeseen difficulties only, not, e.g., for unforeseen difficulty in getting labour or supplies (see second case, p. 283). It is hardly necessary to give examples of cl. 12 situations, since contractors do not seem to have difficulty finding cases in which to make cl. 12 claims.

There is nothing in this clause specifically restricting the remedy to physical conditions which are on the site. It may be argued that because the words “so far as is practicable” in cl. 11 only qualify the duty on the contractor to satisfy himself as to the nature of the site ground and sub-soil, this clause only applies to that ground and not, e.g., to an unforeseeable shortage of suitable material in off-site borrow pits. The argument is not compulsive. It is also argued in the other direction that the “artificial obstructions” need not even be physical—contractors may sometimes be heard murmuring that the clause should be applied to a certain class of obstructive resident engineer. However, the word “obstructions” and the context are against extending the clause to acts of will.

It is strongly suggested that cl. 20 takes precedence over this clause for damage to the works themselves due to unforeseen conditions, etc. (consequential loss is outside cl. 20, p. 100, N. 6). This opinion is based on the words used, with the very specific and limited excepted risks, and the fact that insurance under cl. 21 is to protect the employer as well as the contractor against what may be catastrophic loss due to damage to the works.Therefore in such a case all risks insurers are not entitled to claim cl. 12 compensation from the employer through the contractor to set off against their liability under a policy in joint names, as they sometimes do. For damage to other property see p. 104, N. 1.