The Australian Institute of Architects has released a new version of its pro forma client and architect agreement. The new 2019 Client Architect Agreement (“CAA2019”) replaces the previous 2009 version.

In our experience, the Institute of Architects contracts are widely used on domestic projects, but there is no impediment to using them on commercial or government projects too. The slightly more commercial styling of the CAA2019 may assist in convincing clients to do so.

Available to Institute members via the Acumen website, the CAA2019 comes with a detailed User Guide (for the architect) as well as a shorter “Information guide to the client” (for the architect to give their client).

Some key provisions of the CAA2019 include:

• Provision for the architect’s fee to be set as a percentage, lump sum or hourly rate, or a combination of all these (D.4 – D.6);
• A right for the architect to terminate their services at will (for no reason)(K.2.1);
• Architect remains owner of copyright in the design, with the client receiving a licence that can be revoked for non-payment of fees (F.1.1 – F.1.2);
• A scope of services that is designed to be tailored by adding or striking out services as required (Schedule A);
• Provision for specialist consultants to be engaged by either the architect or the client (E.1.2)(As a risk management measure, we suggest having the client engage them where possible);
• Preserving the moral right of the architect to be identified as the author of the design (F.2.1);
• An express right for the architect to photograph and publicise the project (B.7 – B.8);
• A prompt to define what the client will receive by way of deliverables: PDFs or digital data file transfers (A.1 – Design, and Item 3 of Schedule B). The relevant item should be struck out if the intention is not to provide documents in that format.

While most of these features have been carried over from the 2009 version, the last bullet is an example of a new addition.

Regarding insurance, the CAA2019 requires the architect to hold professional indemnity and public liability insurance (the amounts of both are to be specified in the Schedule) as well as workers compensation (G.1).

The contract review service that informed’s risk managers provide for insurance clients of Planned Cover identifies clauses in contracts that raise a clear risk of triggering common exclusions in consultants’ professional indemnity insurance. Consultants who use our service will be well aware that indemnities, warranties and guarantees given by the consultant, as well as unqualified “fit for purpose” promises, are likely to impose uninsured liability on the consultant. The good news is that the CAA2019 does not contain any of these common kinds of insurance-risk clauses that are usually highlighted in our reviews.

However, if the client seeks to amend the CAA2019, or if your professional indemnity policy contains unusual terms of cover, we would still suggest that you send the contract for our review.

One of the most common questions we received about the previous 2009 version was what amount to insert as the limitation of liability (in the field in Schedule H titled “Architect’s liability to client”). The new version resolves this issue by providing in clause G.2.1 that the architect’s limit of liability is (broadly speaking) the same as the amount of their professional indemnity insurance. This means that no separate figure needs to be inserted. However, if an architect wants the added commercial protection of having a limit of liability that is less than the amount of their professional indemnity insurance (e.g. $100,000) then a special condition would need to be inserted to achieve this.

The CAA2019 contains some other handy protections for the architect, such as an exclusion of liability for indirect, consequential or special losses (G.2.2) and a statement that the architect’s services do not include advice on asbestos, hazardous materials or site contaminants (A.2.4). Overall, the CAA2019 is more beneficial to the architect than most client-drafted consultancy agreements in the commercial or government space.

The Institute of Architects has also released an abbreviated contract called the Client Architect Agreement Limited Services 2019 (CAALS2019). As the name suggests, it is intended for limited engagements with a low value and low complexity. It omits some of the protections from the longer CAA2019, and most importantly it achieves brevity by almost wholly excising the scope of services. This makes it vital, if using this contract, to clearly and carefully define the architect’s role in Schedule B. Confusion over the architect’s role is a common source of disputes. In court cases, architects are often held to a broad traditional scope of services, unless the scope recorded in their consultancy agreement is clearly and unambiguously limited.

For this reason, we suggest using the longer CAA2019, and paying close attention to tailoring the scope of services. If performing a limited scope, strike out any services that the client does not require or does not wish to pay for, and keeping a written record of educating the client about the risks of omitting those services.

 

Wendy Poulton

Risk Manager