It is as if every client an A/E has ever worked for attended the exact same seminar where they were given a “one size fits all” contract that works whether they are buying pencils or hiring an A/E – all while avoiding or limiting the need to negotiate any of the terms and conditions.
It is a disturbing trend and requires an A/E to do their homework, pay attention, and try to mitigate the potential damage before it can be used against them in a court of law.
We are talking about owner-generated contracts that call you anything but an Architect or Engineer. They may have called you any of the following:
- Contractor
- Consultant
- Vendor
- Bidder
- Supplier
- Offeror
So what is the harm in calling you a Contractor or another term, as long as you have an agreement, can perform your duties, and get paid? The potential danger lurks in the rest of the contract where the use of any of these terms carries with it obligations that are not typical duties or responsibilities you have, are required to have, and worst of all – most likely are not covered under your professional liability insurance policy.
For example, if the contract refers to you as a Vendor, there is a good chance you must submit a bid and/or bid bond, provide unit prices, hold your pricing, provide a performance bond, obtain all approvals and permits necessary, submit product data, deliver FOB, install your “product,” agree to a retainage and/or liquidated damages, provide a warranty, guarantee performance, or replace said “product” at no additional cost. This may be suitable for a copier, but not for professional services.
Perhaps you are called a Contractor, which may suffice during the design portion of your project, but what happens when you go to construction? How are you differentiated from the Contractor? When using the same term to describe two different parties – well, let’s just say it can become complicated.
Are you beginning to see the potential problems the use of such terms could cause? So, what can you do about it? Consider some of the solutions provided in XL Group’s Contract eGuide for owner-generated contracts:
- If your contract uses a term other than architect or engineer (the following example assumes “Contractor” is used), consider adding the following or similar language:
Wherever used herein, the term [Contractor] shall mean [insert your firm name], a professional corporation rendering professional [architectural][engineering] services. The term [Contractor] does not imply that [insert your firm name] is engaged in providing construction contracting work and all of its associated activities, nor is [insert your firm name] responsible in any way for the construction means, methods, procedures, testing, inspections, techniques or sequences nor for any aspect of job site safety. These duties are and shall remain the sole responsibility of the construction General Contractor.[1]
- If your contract uses terms such as “certify,” “guarantee,” and/or “warrant,” consider adding the following or similar language:
As used herein, the words certify or certification represents a statement of the [Architect’s][Engineer’s] opinion, based on his or her observation of conditions at that time, to the best of the [Architect’s][Engineer’s] professional knowledge, information and belief at that time. Such statement of opinion does not constitute a warranty or guarantee, either express or implied. It is understood that the [Architect’s][Engineer’s] certification shall not relieve the Owner or the Owner’s contractors of any responsibility or obligation they may have by industry custom or under any contract.[2]
- If your contract includes terms normally associated with the Bidding & Negotiation or Procurement Phase (e.g., anything to do with bidding and performance bonds), try to get them all deleted. Explain how your contract should be specific to the services you are performing, and not be a “boiler plate” that includes terms that would only cause confusion should an issue arise. Failing that, consider adding the following or similar language:
Wherever used herein, terms associated with the actual bidding or procurement of a product and not a service, and terms associated with the actual warranties or guarantees associated with a product and not a service, shall not apply to this Agreement since [insert your firm name] is a professional corporation rendering professional [architectural][engineering] services and does not provide a product that is bid, procured, or warranted.
- It is crucial that your legal counsel and insurance agent review any contract, contract terms, and/or insurance coverage that give you concern.
Words to the wise:
Try to avoid language that calls you something you are not. If it is not possible to change their language, insist on adding this sample language or something similar.
article submitted by Kenneth Payne, Jr., AIA, LEED AP BD+C, Vice President of Quality Control, Risk Management, and Training at Moseley Architects. Contact Kenney at kpayne@moseleyarchitects.com
[1] XL Group’s Contract eGuide for Design Professionals contract clause, “Contractual Reference to the Consultant.”
[2] XL Group’s Contract eGuide for Design Professionals contract clause, “Definitions.”