Construction Law: Elements of a Contract

A Solid Contract Between Owner & Architect is Key

by Ryan Markham, Cotney Construction Law

(Editor’s Note:  Ryan Markham is an attorney at Cotney Construction Law, focusing his practice in the area of construction law.  Markham has extensive experience in delay claims, mechanic’s and materialman’s liens, bond claims, defects, bid protests, contract review, contract negotiations, and OSHA defense.  For more information, go to www.cotneycl.com.)

Architects often find themselves getting pulled in all directions by every party involved in a project.  In the end, what holds the most weight is a solid contract between the architect and the owner that defines each party’s obligations.  The contract between the owner and architect should clearly outline the project’s mutually agreed upon requirements and responsibilities, which could reduce the likelihood of a legal dispute. 

         The four basic contract elements include the owner’s objectives, the architect’s scope of services and deliverables expected, the timing of payment, and the sequence in which the architect is to provide services.  Leaving out any of those four elements could create ambiguity and lead to a legal dispute down the road.  

         Generally, the architect is restricted to being the owner’s agent and initiates the project from planning to completion.  The architect is responsible for the technical design as defined in the contract.  A well-drafted contract is key to a successful construction relationship and should be created with the input of an attorney. 

         Clarify in the contract the consequences, should a client not pay you or refuses to pay what you invoice.  Know the consequences if you fail to meet the agreed-upon schedule.  Be clear on who owns the copyrights to documents produced for the project and the copyright owner’s rights.  Spell out whether a client or owner can reproduce the records. 

         If an agreement with the owner is terminated, who owns the rights to the documents produced for the project?  Who is responsible for obtaining the building permit or providing the site survey and geotechnical information?  Lay out how to handle claims or disputes if negotiations are unsuccessful. 

         Who does cost estimating for a project, and what happens if your design exceeds the budget?  Do you know what kind of insurance you should carry and what you must disclose to the client about that insurance?  Outline the conditions in which either party may suspend or terminate your services and when services recommence if there is a suspension.  Clarify whether the owner must get advanced written approval for proceeding with additional services not initially approved for the project. 

         In many cases, the standard American Institute of Architects (AIA) B203 form is utilized as a starting point.  Experienced developers will tweak the AIA contract to include addendums or create their own version.  The contract must underline the architect’s actual tasks, since it is not uncommon for subcontractors or builders to usurp those responsibilities and assume your functions, which could lead to confusion.

         When an owner engages a design professional, they expect the architect to design a project within known parameters.  The owner should give clear project objectives and preferences to the architect to guide the architect’s design.  To ensure the design liability remains with the architect, the owner should avoid participating in the actual design work. 

         With regard to the contractor, the owner should outline the contractor’s obligations, including a provision that if the contractor finds errors in plans and specifications, they shall report them.  This contract provision can prevent the contractor’s from trying to blame the design, plans, and specifications for issues down the road.

         The architect’s obligations in the contract should include: technical accuracy of all project documents, which should include reviews with the subcontractors; plan production and coordination, including possible change orders; the workability/constructability of the design; code compliance; submittal, review, and approval; document interpretations; timely respond to requests for information; work evaluation as part of the payment provisions; and professional level of competence in skill and judgment.

         Including as much detail as possible in the contract between an architect and owner can help you avoid having to tackle these problems later in court. 

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