AIA Contracts: The Architect’s Agreement With The Owner, Including The Architect’s Role In The Construction Of The Project
AIA CONTRACTS: The Architect’s Agreement with the Owner, including the Architect’s Role in the Construction of the Project
I. Document B141, Standard Form of Agreement
A. General Provisions
AIA Document B141-1997 “Standard Form of Agreement Between Owner and Architect with Standard form of Architect’s Services” (hereinafter to be referred to as either B141 or “Owner-Architect Agreement”) is one of the most commonly used AIA forms for construction projects.
B141 is a two part contract with the initial form containing provisions relating to the overall relationship of the owner and architect as well as provisions relating to payment and dispute resolution. Design and construction administration responsibilities are contained in the second part of the form entitled “Standard Form of Architect’s Services: Design and Contract Administration.” Each part of the form has places for signatures of the parties and care should be taken that each portion is signed by both parties.
The terms of B141 should be examined with regard to their interplay with the terms of AIA Document A201-1997, “General Conditions of the Contract for Construction”. (hereinafter to be or referred to as either “A201″ “General Conditions”).
The general provisions of Document B141 include the following:
1. Initial information. This includes defining the project parameters and designating the architect and the owner’s representatives, as well as identifying the consultants retained at the architect’s expense. Furthermore, pursuant to paragraph 1.1.5, this section provides that where the architect is providing contract administration services, the General Conditions of the Contract for Construction are the edition of the AIA Document A201 current as of the date of the agreement, unless otherwise noted. (Article 1.1, B141).
2. Responsibilities of the Parties. Article 1.2 of the B141 sets out the responsibilities of the owner and the architect. It should be noted that in Article 1.2.7, the owner is to provide prompt written notice to the architect if the owner becomes aware of any fault of defect in the project, including errors, omissions or inconsistencies in the architect’s plans and specifications. Likewise, pursuant to Article 188.8.131.52, the architect is to provide prompt written notice to the owner if the architect becomes aware of any errors in the services or information furnished by the owner. Pursuant to paragraph 184.108.40.206, the architect has to review all laws, codes and regulations applicable to the architect’s services.
3. Terms and Conditions. Article 1.3 sets the terms and conditions of the project, including the cost of the work as well as the terms for when a change in services of the architect may be accomplished after the execution of the agreement. There are also provisions relating to the instruments of service (See Article 1.3.2) and the parties’ rights in those documents. There are also provisions relating to termination and suspension of services (Article 1.3.8) as well as relating to payments to the architect (Paragraph 1.3.9).
4. Scope of Services and Other Special Terms and Conditions. These terms are found at Article 1.4 and includes a designation of all documents comprising the agreement between the owner and architect, as well as provisions for any special terms and conditions.
5. Compensation. This is found at Article 1.5 and sets out the architect’s compensation, provisions for compensation if the services of the architect are changed, as well as methods of payment.
B. Arbitration and dispute resolution
In the event of a dispute between the owner and architect, Articles 220.127.116.11 and 18.104.22.168 of B141 provide that any claim arising out of or relating to the agreement shall be decided by mediation in accordance with the Construction Industry Mediation Rules of the American Arbitration Association (AAA). Pursuant to Article 1.3.5, claims not resolved by mediation shall be decided by arbitration in accordance with the Construction Industry Rules of AAA. Article 22.214.171.124 provides however that the arbitration shall not include any person or entity not a party to the agreement, except by written consent of the owner, architect and the other person or entity sought to be joined.
Under the architect’s duties set out in Article 126.96.36.199, of the architect’s construction administration responsibilities, the architect is also to render initial decisions on claims or disputes between the owner and contractor. Pursuant to Article 4.4.2 of A201, the General Conditions, the architect is required to review the claim within 10 days of receipt of the claim. When the written decision of the architect states that the decision is final but subject to mediation and arbitration and that a demand for arbitration must be made within 30 days, failure to demand arbitration within 30 days results in the architect’s decision becoming final and binding upon the owner and contractor. (Article 4.4.6, A201). After a claim is referred to the architect, any claims arising out of or related to the contract must also be submitted to mediation as a condition precedent to arbitration or institution of legal or equitable proceedings. (Article 4.5.1, A201). AIA document A201-1997 provides that any claim not resolved by mediation shall be decided by arbitration which unless the parties agree otherwise, shall be decided by the Construction Industry Rules of the AAA. (Article 4.6.2, A201). However, the General Conditions also provided that the arbitration between the owner and the contractor shall not include the architect, except by written consent of the owner, contractor and architect. (Article 4.6.4, A201)
Thus, the AIA documents do provide for arbitration but claims between the owner and architect, and claims between the owner and contractor, can not be joined in one arbitration proceeding without written consent of all parties. According to the AIA Commentary to B141-1997, disputes between the owner, contractor and architect are not uncommon. However, the commentary states separate arbitrations are favored because in a court of law, “the architect and contractor would be held to different standards of performance.” The AIA Commentary also favors separate arbitrations because of the “greatly increased cost and time required to resolve multi-party arbitrations.”
II. Architect’s Administration Of the Contract
The provisions relating to Contract Administration can generally be found at Article 2.6, entitled “Contract Administration Services” of AIA Document B141-1997. They can also be found at Article 4 “Administration of the Contract” of A201.
The Contract Administration provisions of these AIA forms include the following:
1. General Administration – This includes serving as owner’s representative during contract administration, reviewing requests by the contractor for additional information about the contract documents, preparing supplemental drawings and specifications where necessary, interpreting the contract documents and rendering initial decisions on claims, disputes or other matters in question between the owner and contractor. (Article 2.6.1, B141; Articles 4.2.1, 4.3, .3.2.1, A201).
2. 2.6.2 Evaluations of the Work – This includes site visits, becoming generally familiar with the work and reporting known deviations from the contract documents. (Article 2.6.2, B141; Article 4.2.2, A201).
3. Certification of Payments to Contractor – This includes the architect reviewing and certifying the amounts due to contractor and issuing certificates for payment, which would be subject to an evaluation of the work for conformance with the contract documents upon substantial completion. (Article 2.6.3, B141; Article 4.2.5, A201).
4. Review of Submittals and Shop Drawings – This includes reviewing and taking appropriate action upon the contractors submittals such as shop drawings, product data and product samples. (Article 2.6.4, B141; Article 4.2.7, A201).
5. Changes in the Work – This includes preparing change orders and construction change directives for the owner’s approval. (Article 2.6.5, B141; Article 4.2.8, A201).
6. Project Completion – This includes conducting inspections to determine the date of substantial completion and the date of final completion and issuing a final certificate for payment. (Article 2.6.6, B141; Articles 9.8, 9.10, A201).
7. Facility Operation Services – This includes meeting with the owner or the owner’s designated representative to review the need for facility operation services. (Article 2.6.7, B141).
8. Schedule of Services – This includes limiting the design and contract administration services to particular limits such as a certain number of reviews of shop drawings or visits to the site by the architect. There are also provisions for particular design and contract administration services which would be considered as a change in services including providing contract administration services sixty (60) days after date of substantial completion and responding to the contractor’s request for information where such information is available to the contractor from a careful study and comparison of the contract documents and other materials. It also notes items such as programming, land survey services and geotechnical services that are to be furnished or provided only if specifically designated in a table found at Article 2.8.3. (Article 2. 8, B141).
B. General Administration
The architect also needs to review timely requests by the contractor for additional information about the contract documents. (Article 2. 6.1.5, B141). According to the official comments to 188.8.131.52, during construction, the contractor may be confronted with ambiguities, omissions or conflicts within the drawings and specifications. The contractor is obligated to bring these matters to the attention of the architect. 184.108.40.206 requires that a properly prepared request for information should be in the form prepared or approved by the architect and should include a detailed written statement that indicates the specific drawings or specifications in need of clarification and the nature of clarification requested. The architect’s response to said request for information should likewise be in writing.
C. Evaluations of the Work
Section 2.6.2 of B141 provides for the architect’s duties with regard to on-site observations. It states as follows:
2.6.2 EVALUATIONS OF THE WORK
220.127.116.11 The Architect, as a representative of the owner, shall visit the site at intervals appropriate to the state of the Contractor’s operations, or as otherwise agreed by the Owner and the Architect in Article 2.8, (1) to become generally familiar with and to keep the Owner informed about the progress and quality of the portion of the Work completed, (2) to endeavor to guard the Owner against defects and deficiencies in the Work, and (3) to determine in general if the Work is being performed in a manner indicating that the Work, when fully completed, will be in accordance with the Contract Documents….
(Section 4.2.2 of A201 contains virtually identical language).
Section 18.104.22.168 of B141 specifically notes that the architect is not required to be on-site at all times nor does the architect have any control over construction means and methods:
However, the Architect shall not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work. The Architect shall neither have control over or charge of, nor be responsible for, the construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the Work, since these are solely the Contractor’s rights and responsibilities under the Contract Documents.
As to observations, Section 22.214.171.124 of B141 states as follows:
126.96.36.199 The Architect shall report to the Owner known deviations from the Contract Documents and from the most recent construction schedule submitted by the Contractor. However, the Architect shall not be responsible for the Contractor’s failure to perform the Work in accordance with the requirements of the Contract Documents. The Architect shall be responsible for the Architect’s negligent acts or omissions, but shall not have control over or charge of and shall not be responsible for acts or omissions of the Contractor, Subcontractors, or their agents or employees, or of any other persons or entities performing portions of the Work.
(See also Section 4.2.3 of A201).
According to the official comments to Section to 188.8.131.52, the provision providing that the architect is not responsible for the contractor’s failure to properly perform the work “helps establish the dividing line between the architect’s responsibilities and those of the contractor.” The comments further state that “[t]his clear allocation of responsibility will help a court or arbiter assess legal responsibility for accident or construction deficiencies, thus protecting the interests of all participants on the project.”
One line of cases has held that where the architect abided by his contractual duty to make periodic visits to the site, that these AIA (or similar) provisions imposed no duty upon the architect to discover the omissions of the contractor and absolved the architect from liability if there were in fact such omissions. Shepard v. City of Palatka, 414 So.2d 1077 (Fla. App. 5 Dist. 1981); Moundsview Independent School Dist. No. 621 v. Buetow and Associates, Inc., 253 N.W.2d 836 (Minn. 1977); Putman v. The Village of Bensenville, 786 N.E.2d 203, 337 Ill. App. 3d 197, 271 Ill. Dec. 945 (Ill. App. 2 Dist. 2003).
The case of Shepard v. City of Palataka, 414 So.2d 1077, involved the standard AIA exculpatory language. The Florida court noted in Palataka that if it was demonstrated that the architect ignored his contractual duty to make periodic visits to the site, liability could possibly lie regardless of the exonerating language. However, where the architect had made inspections but had not discovered the defect in question, the misuse of a wallboard product, the Court held that the AIA language protected the architect because it imposed no duty upon him to discover the omissions of the contractor and absolved him of liability if there were omissions. 414 So.2d at 1078-1079.
In Moundsview Independent School Dist. No. 621 v. Buetow and Associates, Inc., 253 N.W.2d 836, a school district brought an action against an architect, contractor and subcontractor to recover for damages allegedly due to the failure to adequately fasten the roof to a building and for the architect’s failure to discover the inadequate fastening during on-site observations. The Supreme Court of Minnesota held that the architect which was only required under terms of contract to render general supervision of construction site, and which was not responsible “for the Contractor’s failure to carry out the Work in accordance with the Contract Documents,” pursuant to standard AIA language, was absolved from any liability, as a matter of law, for the contractor’s failure to follow plans and specifications.
In Putman v. The Village of Bensenville, 786 N.E.2d 203, a pedestrian who fell on a sidewalk ramp and was rendered a paraplegic brought a negligence action against a village, a concrete subcontractor, and an engineering firm for alleged defects in the ramp. In Putnam, the contract upon which plaintiffs sought to impose a duty upon the engineer limited the engineer’s liability for any failure of the subcontractor to carry out its responsibilities in accordance with the project documents (however, the case does not reference the standard AIA exculpatory language). The court held that this disclaimer was effective to relieve the engineer of liability.
D. Review of Submittals
When the architect is performing construction or contract administration, the architect is required to review submittals such as shop drawings, product data and samples “but only for the limited purpose of checking for conformance with the information given and the design concept expressed in the contract documents.” (Article 2.6.4, B141; Article 4.2.7, A201). Under A201, the contractor must obtain approval of shop drawings, product data and samples before performing the work when the contract documents require such approval. (Article 184.108.40.206, A201). The comments to Article 4.2.7 of A201 note the limited scope of the architect’s review:
Shop drawings, product data and samples are not contract documents. They represent the contractor’s intentions for implementing the requirements of the contract documents. Architects, therefore, review them only for the limited purposes stated.
Some courts have narrowly interpreted the design professional’s duty to review submittals. In Waggoner v. W & W Steel Co., 657 P.2d 147 (Okla. 1982), the court found that the architect in reviewing submittals for a contractor’s intended construction of a steel structure that subsequently collapsed, injuring and killing workers was not responsible for checking the temporary connections proposed by the contractor. The court based its decision on the language that the review was only for conformance with the design concept and with the information given in the contract documents.
III. Limitation of Liability Provisions
Article 13.7.1 of A201, the General Conditions, provides essentially that in actions between the owner and the contractor that for acts occurring prior to substantial completion, that the statute of limitations begins running on substantial completion and that for acts between substantial completion and final certificate for payment, that the statute begins running on the date of the final certificate for payment. For acts after final certificate for payment, it provides as follows:
3. After Final Certificate for Payment. As to acts or failures to act occurring after the relevant date of issuance of the final Certificate for Payment, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than the date of any act of failure to act by the Contractor pursuant to any Warranty provided under Paragraph 3.5, the date of any correction of the work or failure to correct the Work by the Contractor under Paragraph 12.2, or the date of actual commission of any other act or failure to perform any duty or obligation by the Contractor or Owner, whichever occurs last.
Article 220.127.116.11 of B141, the owner-architect agreement, contains similar provisions.
Some states such as Ohio (See In Re Global Industrial Technologies, Inc., 2005 WL 307 4184 (Bankr at W.D. Pa. 2005)) and Michigan (See Rory v. Continental Insurance Company, 473 Mich. 457, 703 N.W.2d 23 (Mich. 2005)) allow the contracting parties, under certain circumstances, to limit the time in which suit may be brought, even if that time is shorter than the state’s statute of limitations. Other states such as Mississippi (See, Pitts v. Watkins, 905 So.2d 553 (Miss. 2005)) and Alabama (See Turner v. Westhampton Court, L.L.C., 2004 WL 2201933 (Ala., Oct. 1, 2004)) do not. As such, one should check the law of your jurisdiction to determine whether these provisions are enforceable.
There has also been a recent trend toward contractual provisions limiting liability to a specific amount such as the amount of the professional service fee, or the amount of the professional liability insurance coverage. AIA Document B511 “Guide for Amendments to AIA Owner/Architect Agreements” contains two options as to such clauses in Amendment 16.
Option A reads as follows:
LIMITATION OF LIABILITY
COMPENSATION. NEITHER THE ARCHITECT, THE ARCHITECT’S CONSULTANTS, NOR THEIR AGENTS OR EMPLOYEES SHALL BE JOINTLY, SEVERALLY OR INDIVIDUALLY LIABLE TO THE OWNER IN EXCESS OF THE COMPENSATION TO BE PAID PURSUANT TO THIS AGREEMENT OR OF ______________ DOLLARS ($________), WHICHEVER IS GREATER, BY ANY REASON OF ANY ACT OR OMISSION, INCLUDING BREACH OF CONTRACT OR NEGLIGENCE NOT AMOUNTING TO A WILLFUL OR INTENTION WRONG.
Option B reads as follows:
LIMITATION OF LIABILITY
INSURANCE. NEITHER THE ARCHITECT, THE ARCHITECT’S CONSULTANTS, NOR THEIR AGENTS OR EMPLOYEES SHALL BE JOINTLY OR INDIVIDUALLY LIABLE TO THE OWNER IN AN AMOUNT IN EXCESS OF THE CURRENTLY MAINTAINED PROFESSIONAL LIABILITY INSURANCE COVERAGE CARRIED BY THE ARCHITECT.
Limitations of liability in construction contracts between commercial entities have been found to be enforceable. See, Valhal Corp. v. Sullivan Associates, Inc., 44 F.3d 195 (3rd Cir. 1995) (applying Pennsylvania law); Marbro, Inc. v. Borough of Tinton Falls, 297 N.J. Super. 411, 688 A.2d 159 (N.J. Super. L. 1996).
Under Article 4.3.1 of AIA Document A201, a claim is a “demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the Contract.” The term “claim” also includes other matters and disputes in question between the owner and contractor arising out of or relating to the contract. Article 4.3.2 gives the contractor twenty-one days after occurrence of the event giving rise to such claim, or twenty-one days after the claimant first recognizes the condition giving rise to the claim, for the claim to be initiated. When the contractor has a dispute regarding the contract, notice of the condition should be given within twenty-one days of first observing the condition or else the contractor’s claim may be invalidated. See, Buckley and Co. v. City of N.Y., 121 A.D.2d 933, 505 N.Y. S.2d 140 (1986); Standard Electric Service, 1998 WL 542 696. Article 4.3.2 also provides that claims must be initiated by written notice to the architect and the other party.