An Overview of the RIBA Appointment Agreements RIBA NW Pt 3 - Chester 16 April 2011 Richard Brindley RIBA RIBA Group Director Membership & professional Support Why do we need a standard form of agreement/contract for the appointment of an architect? avoid misunderstandings & disputes define fees and provisions for payment assert and retain copyright establish a fair and reasonable allocation of risks incorporate standard industry practices within a proven legal basis in case law comply with RIBA & ARB code of conduct requirements provide clarity, comfort and protection to both parties 1
What should an Appointment Agreement do? identify parties to the appointment allocate & define (i.e. limit) responsibilities and liabilities define the scope of work confirm the legal framework (Form of Law, etc) confirm the fee, method of calculation and payment set out methods of dispute resolution define provisions for the termination of the Agreement Sir Christopher Wren RIBA 2
Assistants in the office of Bodley and Garner 1883 RIBA Office of G Partnership Architects 1956 RIBA 3
Archigram office 1972 RIBA An architect of John S Bonnington Partnership using a computer for design 1981 RIBA 4
The reflect the changes in the updated RIBA Outline Plan of Work (as amended Nov 2008) amended definitions of work stages F1 and F2 greater flexibility in design services and role specifications for different procurement routes The replace the RIBA SFA/99/2004 and the RIBA Agreements 2007 2010 format is organised in the form of a number of separate components for simplicity and flexibility available in architect versions and versions for use by other consultants available in print and on-line formats The aim to be: aligned with current working practices, legislation and procurement methods attractive to clients, architects and other consultants, with robust but fair terms flexible system of appointment components, suitable for a wide range of projects and services complementary to the CIC pan-professional scope of services appointment agreements for multi-disciplinary teams on major building projects 5
Key new features in the : Obligations of the architect: no explicit reference to time-scale and cost limits Provisions for termination; equal rights for architect and client Revocation of licence; better clarification of architect s right to suspend the copyright licence in the event of non-payment No set-off ; option to incorporate with a consumer client Increased interest charges on late payment of fees cont. Key new features in the : Introduction of the option of an aggregate cap on liability Adjustment to reflect legislative changes, including the Cancellation of Contracts made in a Consumer s Home or Place of Work Regulations 2008 and the Provision of Services Regulations 2009 Right for the architect to have reasonable access to photograph a project, and to publish images 6
RIBA Outline Plan of Work 2007 amended Nov 2008 Preparation A Appraisal B Design Brief Design C Concept D Design Development E application for detailed planning permission Technical Design Continued RIBA Outline Plan of Work 2007 amended Nov 2008 Pre-Construction F Production Information G H F1 preparation of production information in sufficient detail for a tender or tenders to be obtained and application for statutory approvals F2 preparation of further information for construction required under the building contract Tender Documentation Tender Action Construction J Mobilisation K Construction to Practical Completion Continued 7
RIBA Outline Plan of Work 2007 amended Nov 2008 Use L Post Practical Completion L1 administration of the building contract after practical completion and making final inspections L2 assisting building user during initial occupation period L3 review of project performance in use RIBA Standard Agreement 2010 Architect RIBA Standard Agreement 2010 - Consultant RIBA Concise Agreement 2010 - Architect Domestic Project Agreement 2010 Architect Sub-consultant Agreement 2010 Continued 8
Additional schedules and supplementary agreements only available in electronic format: Access consultancy services schedule Historic building or conservation project services schedule Small historic building or conservation project services schedule Initial occupation and post-occupation evaluation services schedule Master planning services schedule Multi-disciplinary design services schedule Contractor s design services schedule Contractor s design services schedule notes Novation for D&B Use CIC Forms: There is no RIBA supplementary switch or novation agreement. The RIBA recommends the compatible CIC Novation Agreement. Refer to CIC briefing notes at: http://www.cic.org.uk/activities/liability.shtml Range of other liability briefings including: Client-consultant confidentiality Indemnities Collateral warranties Managing liability through financial caps 9
Additional schedules and supplementary agreements only available in electronic format: Draft third party rights schedule Draft warranty by a sub-consultant (back-to-back sub-contract) Public authority supplement Additional schedules coming soon: Bespoke interior design services schedule Client design advisor services schedule Components of RIBA Standard Agreement 2010 - Architect: Standard Conditions of Appointment for the Appointment of an Architect Schedules: project data, services (role specifications, design services and other services), fees and expenses Memorandum of Agreement for the Appointment of an Architect Notes: use and completion, model letter 10
Conditions of Appointment Sections 1. Definitions and interpretation 2. Obligations and authority of architect 3. Obligations and authority of client 4. Assignment and sub-contracting 5. Fees and expenses 6. Copyright and use of information 7. Liability and insurance 8. Suspension or termination 9. Dispute resolution 10. Consumer s right to cancel Conditions of Appointment -Section 1 Definitions and Interpretation etc. Definition of key terms such as brief, timetable (defined terms start with capital letters in the text) Operational issues, including: Communications, always in writing Applicable contract law = England & Wales (can be stipulated otherwise, and can be different from location of the project. Forms need slight amendment for use in Northern Ireland & Scotland) 11
Conditions of Appointment -Section 2 Obligations and Authority of the Architect: Duty of Care The Architect: exercises reasonable skill, care and diligence in accordance with the normal standards of the Architect s profession in performing the Services and discharging the Architect s obligations. Professional obligations are based on Duty of Care legal concept, which is very different from Fitness for Purpose or satisfactory quality basis for provision of goods. Legal references: Provision of Services regulations 2009, Supply of Goods and Services Act 1982 Conditions of Appointment -Section 2 Obligations and Authority of the Architect: Legal View The degree of skill and care:...the test of whether the architect is in breach of his duty to [his client] is whether an architect did or did not exercise the skill and care to be expected of an ordinary architect exercising and professing to have that skill. Although in general the duty of an architect... is only to exercise reasonable skill and care, a higher duty may be imposed exceptionally if the circumstances show that it was the common intention of the parties that the architect... design a building which would be fit for its purpose. It is evidence of ignorance and lack of skill that the architect has acted contrary to the established practices that are universally recognised by members of the profession. It is not sufficient to establish a breach of duty to show that another architect of greater experience and ability might have used a greater degree of skill and care". (Halsbury's Laws of England, fourth ed. Vol. 4(2)) Concurrent tortious liability: a duty of care to the client may arise under the law of tort in addition to the contractual undertaking to exercise reasonable skill and care. (Midland Bank Trust -v- Hett, Stubbs & Kemp [1978] 3ALL ER 571) 12
Conditions of Appointment -Section 2 Obligations and Authority of the Architect: Duty to Inform The Architect: keeps the Client informed of progress in the performance of the Services and of any issues that may materially affect the Brief, Construction Cost, the Timetable, or the Quality of the Project. informs the Client upon becoming aware of the need to appoint Other Persons, other than those named in the Project Data, to perform work or services in connection with the project; and/or any information, decision or action required from the Client or others in connection with performance of the Services. Conditions of Appointment -Section 2 Obligations and Authority of the Architect: Collaboration The Architect: Collaborates with Other Persons named in the Project Data, or whose appointment is foreseeable and, as applicable, shall coordinate and integrate the information received into the Architect s work. 13
Conditions of Appointment -Section 2 Obligations and Authority of the Architect: authority The Architect: shall act on behalf of the Client in the matters set out or necessarily implied in the Agreement or in project procedures agreed with the Client, but has no authority without the Client s prior approval: 1. to enter into any contractual or other commitment on behalf of the Client; 2. to terminate the employment of Other Persons appointed by the Client; 3. to make or cause to be made any material alteration to or addition to or omission from the Services or the approved design Conditions of Appointment -Section 3 Obligations and Authority of the Client: info.& decisions The Client: shall supply the initial statement of the Client s requirements and shall advise the relative priorities of the Client s requirements, the Brief, the Construction Cost and the Timetable. shall provide all the information in the Client s possession, or reasonably obtainable, which is necessary for the proper and timely performance of the Services and the Architect shall be entitled to rely upon such information. shall give decisions and approvals and shall take such actions necessary for the proper and timely performance of the Services. 14
Conditions of Appointment -Section 3 Obligations and Authority of the Client: instructions Where the Architect has responsibility to direct and/or coordinate the work or services of or give instructions to Other Persons, such instructions shall be issued only through the Architect and the Architect shall not be responsible for any instructions otherwise issued. Conditions of Appointment -Section 3 Obligations and Authority of the Client: time and cost The Client acknowledges that the Architect does not warrant: that planning permission and other approvals from third parties will be granted at all, or if granted, will be granted in accordance with any anticipated time-scale; compliance with the Construction Cost and/or the Timetable, which may need to be reviewed for such matters as, but not limited to: approved variations arising from design development or requested by the Client; delays caused by any Other Person; and/or any other factors beyond the control of the Architect 15
Conditions of Appointment -Section 4 Assignment & sub-contracting Neither Architect or Client can assign their benefits of the agreement without written consent of the other Architect needs consent of Client to sub-let any part of the services or to appoint specialist services Conditions of Appointment -Section 5 Fees & Expenses: Fee types & calculation Outlines basic fee types: Percentage of construction cost clause 5.4 Lump sum clause 5.5 & 5.7 can update annually Time charge - clause 5.6, time to be reasonably spent Combination of any above Other agreed method value added? Definition of Construction Cost for % fees: Target cost for constructing brief, at start, then Latest professionally prepared estimate approved by client, then.. Actual costs of construction upon agreement of final account Includes equipment fitted by contractor, contractors profit/overheads, but excludes: VAT + any dispute resolution costs, client s legal expenses, contractor s losses/expenses, LADs 16
Conditions of Appointment -Section 5 Fees & Expenses: Fee adjustment (clause 5.8): Basic Fee shall be adjusted for any loss and/or expense if: material changes are made to the Brief and/or the Construction Cost and/or the Timetable and/or the Services are varied by agreement Basic Fee shall not be adjusted if Construction Cost reduces due to deflationary market conditions Conditions of Appointment -Section 5 Fees & Expenses: Additional fees (clause 5.9): Where the Architect for reasons beyond the Architect s reasonable control incurs extra work or loss and expense for which the Architect would not otherwise be remunerated, the Architect shall be entitled to additional fees calculated on a time basis Additional fees due for: Substantive parts of design not competed or provisional/approximate before construction commenced Performance of the Services is delayed, disrupted or prolonged Variances required after design approved or work commenced Cost of any work, installation or equipment for which the Architect performs Services is omitted from or not included in the Construction Cost. 17
Conditions of Appointment -Section 5 Fees & Expenses: Options for non-payment of fees: Image courtesy of FreeDigitalPhotos.net Enquiry and negotiations Interest charges and debt collection costs Adjudication, arbitration or court action Suspension/termination Revocation of licence Conditions of Appointment -Section 5 Fees & Expenses: Evidence needed to claim a fee adjustment or additional fees: In order to establish that you have been involved in extra work and have incurred extra expense, for reasons beyond your control; i.e. not as a result of lack of skill, care or diligence on your part, you need: Evidence of the work you would have been involved in and the expense you would have incurred in performing the contractually agreed scope of services. Evidence that the reasons for the need for the changes in the scope of services were beyond your control. Evidence of how the work and expense is affected by the material changes that have occurred. The Architect must inform the Client immediately on becoming aware that the provisions for fee adjustment or additional fees will apply 18
Conditions of Appointment -Section 5 Fees & Expenses: Payment: Payment due within 28 days of issuing accounts Accounts issued at least monthly Client can t withhold fees ( no set-off ) unless agreed with Arch or tribunal Payment of all fees due + any incurred loss/expense on termination or suspension of the services Late payments can incur interest of 8% above base rate. (based on Late Payments &of Commercial debts Act 2002) Recovery of costs of any successful claims Conditions of Appointment -Section 5 Fees & Expenses: Records to support a claim: Project budget, demonstrating the costing of the original scope of services. Statement of net fee, after contributions to profit and overheads (excluding those included in the hourly rates). Number of hours (costed at the appropriate hourly rates) available at each work stage to complete the Services. (Check that the hours are realistic for the scope of services required). Monitoring against budget at each work stage using coded time management records. Material changes and variations and their consequence for the Services and their delivery, with accurate time records for the extra work involved. Correspondence with Client to inform them of the material changes and their impact. 19
Conditions of Appointment -Section 6 Copyright & Use of Information Architect owns copyright and grants licence to the client (asserting moral rights and rights under Registered Designs Regulations 2001 Client can only use licence for purpose intended and Architect not liable for any modifications by others to the design/information Architect can suspend licence for non-payment fees (7 days notice) Conditions of Appointment -Section 7 Liability & Insurance Define time limit for actions against breach of duty contract & tort Limit liability by insurance cap to PII cover specified in project data and personal liabilities for staff/agent (Babbs v Merret also Harris v WyreDC) Level PII depends on nature of the project & risk Limit liability by net contribution from other liable consultants/ contractors with similar cover/limits (i.e. not joint & several liability) PII cover limited for defined period or if no longer commercially available, need to provide evidence to cleitn when reasonably asked and inform client immediately of PII cover changes Collateral warranties & agreed Third Part rights, on same basis as main contract can be required of the Architect, if fees/costs paid. Otherwise all 3 rd party rights are excluded. 20
Conditions of Appointment -Section 8 Suspension & Termination Client may suspend service by giving 7 days notice; then resume when default remedied. If not remedied, can terminated with reasonable notice or after 6 months with 7 days notice. Architect may suspend service by giving 7 days notice, but for specific reasons: Client has not paid fees due Client in material/persistent breach of obligations Architect impeded due to reasons beyond his control Immediate termination if either party becomes bankrupt, goes into administration or liquidation, insolvent, death or incapacity. Conditions of Appointment -Section 9 Dispute Resolution: Client & Architect can first try to resolve and dispute by negotiation or mediation, if that doesn t work... Adjudication: agree adjudicator, or by nominating body (RIBA, etc) Arbitration: (in England and Wales Arbitration Act 1996) Or on to litigation 21
Conditions of Appointment -Section 10 Consumer s right to cancel: For consumer clients, right to have 7 day cancellation notice period from making the agreement to comply with the UTTC Unfair Terms in Consumer Contracts Regulations 1999 Conditions of Appointment - Schedules - Project data Project Name & Description Project brief Time and cost targets Project appointments Liability and insurance limits Supplementary/third party agreements Dispute resolution Applicable law Effective date (date services start/started) Include as much known and agreed project information as possible 22
Conditions of Appointment - Schedules - Services Specified roles and applicable RIBA work stages Other project appointments (Other Persons) Role specifications Project Manager Lead Consultant CDM Co-ordinator Cost Consultant Contract Administrator or Employer s Agent Lead Designer Designers (including Architectural Designer) Design Services (RIBA work stages A L) Other Services (e.g. accessibility audit, party wall matters) Conditions of Appointment - Schedules - Fees & expenses Basic Fee and work stages Other fees Time charges (also relevant to any additional fees) Expenses and disbursements Payment Payments monthly, based on work stages bill early and often - assists cash flow and reduces financial risk to architect and gives known cash flow for the Client 23
Memorandum of Agreement executed under hand as a simple contract (6 year contractual liability period) or, as a deed (12 year contractual liability period) Model Letter alternative to memorandum of agreement RIBA Agreements 2007 Components of RIBA Concise Agreement 2010 - Architect: Concise Conditions of Appointment, incorporating Small Project Services Schedule Fees and Expenses Schedule Notes: use and completion, model letter 24
(Concise Agreement) Concise Conditions of Appointment for an Architect: Concise Conditions set out in shorter terms the obligations of the architect Primarily for use with a client acting for business purposes or as a public authority An agreement with a business client is a construction contract to which the Housing Grants, Construction and Regeneration Act 1996 applies The Conditions are not normally applicable where the client is a consumer, but can be so used if a substantial number of the provisions are individually negotiated In deciding to use the Concise Conditions the parties need to consider whether they are compatible with the complexity of the proposed project Components of Domestic Project Agreement 2010 - Architect: Conditions of Appointment for an Architect for a Domestic Project, incorporating Small Project Services Schedule Fees and Expenses Schedule Notes: use and completion; model letter 25
(Domestic Agreement) Conditions of Appointment for an Architect for a Domestic Project: Designed for use where the client requires work in his or her home The client will be a consumer to whom the Unfair Terms in Consumer Contracts Regulations 1999 apply Provisions relating to payment, the contractual limitation period and the limitation of liability, professional indemnity insurance and, in particular, dispute resolution need to be individually negotiated with the consumer client 26
For a more detailed explanation of the RIBA Agreements: Guide to the By Roland Phillips RIBA Publishing www.ribapublishing.com www.ribabookshops.com Some golden rules: RIBA and ARB codes of conduct require a comprehensive agreement in writing Check the name of the client in the agreement is the same as you anticipated Ensure the client understands the payment provisions Don t undertake work which is beyond the resources you can access as a practice Don t start any work until the agreement is signed 27
Bespoke Appointment Agreements RIBA Insurance Agency Guide to Reviewing Contract Documentation: Duty of care; reasonable, expert, professional Sub-consultants Deleterious materials Copyright PI insurance; commercially reasonable rates Liability periods Fitness for purpose/performance warranties Collateral warranties Bespoke Appointment Agreements RIBA Insurance Agency Guide to Reviewing Contract Documentation: Assignment or novation Economic and consequential loss Joint and several liability Net contribution Liability caps Jurisdiction CDM Third party rights Pollution/asbestos liability 28
Bespoke Appointment Agreements RIBA Insurance Agency Guide to Reviewing Contract Documentation: Available to download at: http://www.architectspi.com/pages/riskmanag ement.aspx Letter contracts are sometimes used for very small projects, (but the RIBA does not recommend their use). At the very least letter contracts must cover: ARB codes of conduct requirements Definition of the services to be offered Statutory requirements Provisions for fees and payment Copyright and assignment Liability Provisions for termination of the agreement Disputes and net contribution 29
A Very Small Project might be defined as: for a business client as a non-notifiable project under CDM 2007 i.e. where construction work is not expected to last longer than 30 working days or involve more than 500 person days for a domestic client as a project where the cost of building work will not exceed, say 40,000; or as a survey or inspection and report A Guide to Letter Contracts for very small projects, surveys and reports By Roland Phillips RIBA Publishing ISBN 9781859463147 Stock code 68969 guidance on key content and relevant legislation model letters and worked examples electronic letter templates available on-line 30
Conclusion Purpose of appointment agreements: properly engage Architect within a legal framework clarifying the respective undertakings of the parties avoiding misunderstandings & disputes getting paid and retaining copyright enabling a successful client-architect relationship 31