Following the construction industry and related legal topics in the United States.


Tuesday, December 11, 2007

Changes to the AIA Owner-Architect Agreement

In November of 2007, the American Institute of Architects ("AIA") released significant revisions to many of its standard form design and construction agreements. The AIA’s Standard Form of Agreement between Owner and Architect (AIA’s B101-2007) varies greatly from its 1997 predecessors (AIA B141 and B151). While everything about it demands scrutiny before it is used, a few of its more notable changes (and non-changes) are discussed below.

Back by popular (architect) demand...

  • Mutual waiver of consequential damages leads the list of significant non-changes. This so-called “mutual waiver” was added for the first time in the 1997. Owners have, however, criticized its practical effect as being anything but “mutual” – claiming that the typical burden of consequential damages falls far more heavily on owners than it does on architects. While acknowledging this controversy, the clause is popular among architects; and so the AIA elected to keep it in the 2007 forms.

Changes

  • One contract form. For reasons that baffled many observers, the AIA, in 1997, split its standard form Owner-Architect Agreement into two documents, the first featuring project-specific information and the second containing a description of services common to most projects. In 2007, the two parts were recombined – and a standard form exhibit was added in which to supply much of the project-specific information.

  • Insurance. For more than 100 years, the AIA standard form did not impose an obligation on architects to provide professional liability insurance. That changed with B101-2007, which also requires that the parties specify the amount of coverage for general liability, workers compensation, and automobile liability.

  • Dispute resolution. In previous generations of AIA documents, the architect was given initial decision-making authority in most disputes, and was integrally – if not decisively – involved in resolving them. Doubts were raised, in many cases, as to the architect’s objectivity, especially when the dispute at-hand involved the conduct of the architect. B101-2007 provides the parties with the opportunity to formally appoint an independent “Initial Decision Maker” (“IDM”) – although, if the parties fail to do so, the AIA form designates architect as IDM by default.

  • Litigation v. arbitration. The 1997 Owner-Architect Agreement contained a mandatory arbitration clause. B101-2007, in contrast, allows the parties to designate whether disputes that are not resolved by mediation will be resolved by litigation or arbitration. [Note, however, that the AIA software pre-designates arbitration as the means of binding dispute resolution – but that pre-designation can be overridden.]

  • Standard of Care. Previous generations of AIA Owner-Architect Agreements did not expressly indicate a standard of care. That changes with B101-2007, which states that “[t]he Architect shall perform its services consistent with the professional skill and care ordinarily provided by architects practicing in the same or similar locality under the same or similar circumstances....” This new language suggests, if not imposes, a locality-based standard of care. How this will mesh existing judicially-established and recognized standards of care remains to be seen. Parties may also find this new standard of care challenging to apply or prove, depending on the project and the location.

The 2007 AIA Owner-Architect Agreement is peppered with many other changes and departures from the 1997 form. Close attention must be given to each before the form is employed on a particular project. (This entry published by David Roberts, a member of Womble Carlyle's construction and real estate development practice groups.)

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