Last year, after two years of consultation, the RIBA launched a new suite of agreements specifically designed to offer a fairer allocation of risk between the client and the architect and to provide an innovative, flexible system for assembling appointments. The suite is now approaching its one-year anniversary yet there still appears to be a much-heated debate regarding its success. Both clients and architects have issues with the amended clauses, and even more interestingly, the RIBA and Association of Consultant Architects (“ACA”) are unable to present a united front as the ACA refuses to endorse the new forms. So, asks Stacy Sinclair, what’s all this fuss about?
An Overview
The RIBA Agreements 2007 are comprised of separate, individual components which, when assembled, are customised to meet the individual needs of each project. They incorporate the latest changes in legislation, including the recently amended CDM Regulations, along with the new RIBA Outline Plan of Work 2007. The agreements are available for the appointment of ‘the Architect’ or ‘the Consultant’, are offered in ‘Standard’, ‘Concise’ or ‘Domestic’ forms, and are complete with Client Guides and Draft Supplementary Agreements including a Sub-Consultant’s Warranty, Third Party Rights Schedule, and Consultant Switch/Novation agreements.[1]
The Components
The Standard Agreement for the appointment of an Architect (S-Con-07-A), which replaces the previous SFA/99 and CE/99,[2] is a pack containing:
- Standard Conditions of Appointment for an Architect: Architect’s Copy/Client’s Copy;
- Standard Agreement for the Appointment of an Architect: Memorandum of Agreement;
- Standard Agreement: Model Letter;
- Standard Agreement: Notes on use and completion;
- Project Data;
- Schedule of Design Services;
- Schedule of Fees and Expenses; and
- Schedule of Role Specifications.
Available both in hard copy and electronically online, the suite has been designed to provide flexibility and choice as users are able to purchase and customise the individual components as they require. The RIBA markets this as a unique strength of the new agreements. However, with numerous individual documents, some find it cumbersome and tedious to assemble. So perhaps its greatest strength is actually its greatest weakness? Could the Project Data, Schedules of Design Services, Fees and Expenses and Role Specifications not have been consolidated into one document thereby minimising excessive administration?
The architect’s perspective
Whilst the new agreements may look familiar, architects should take particular note of the new amendments and understand the significance of their implications, prior to jumping in blindly. For example, clause A2.1.1 sets out the duty to take reasonable skill and care as one would typically expect of an architect or consultant. However, clause A2.1.2 then goes on to require further, more onerous obligations. The Standard form now states that the architect:
“(a) performs the Services, so far as reasonably practicable, in accordance with the Brief and any timescale or cost limit agreed with the client”.
Though it is too early to say how this ambiguous clause will be interpreted by the courts, architects should be aware that this clause clearly extends their duties.
Amendments in the new Domestic form should also be noted. In particular, the “no set-off” clause has been omitted. In all RIBA agreements since the SFA/92, the clause has read:
“All rights of set-off at common law or in equity which the client would otherwise be entitled to exercise are expressly excluded.”
This is of great importance to architects in situations where they have been employed on a number of projects for a single client and, as a result of their negligence or lack of performance on one project, the client is looking to reduce their fees which are properly due on another project. In the new 2007 Agreements, the Standard form continues to expressly exclude the client’s common law right to set-off these monies. The client must pay the fees due, and reclaim any payments made via adjudication or litigation. However, in the Domestic form this clause has now been omitted. The RIBA stated that they wish to avoid an investigation by the Office of Fair Trading as, under the Unfair Terms in Consumer Contract Regulations 1999, clauses which could potentially be deemed to be unfair, such as no set-off, must be explained to consumer clients. However, architects have had to advise their domestic clients of such clauses since before the SFA/99 was published, so it seems curious that only now has fear of non-compliance set in.
Architects should also be aware that as all versions of the 2007 Agreements no longer provide the adjudicator with the discretion to allocate legal costs and expenses, adjudication may no longer be available under contracts where the client is a consumer. This follows the 2002 case of Picardi v Cuniberti.[3]
The client’s perspective
There are several changes which aim to create a more balanced agreement between the parties. However, clients must still take care to ensure that their interests are protected. For instance, the net contribution clause now appears to be optional. If a client prefers to cap the architect’s liability, rather than opting for the net contribution clause, the client must be sure to directly delete the net contribution itself.
Further, clause A3.3 has expanded the client’s responsibility to:
“supply, free of charge, all the information in the Client’s possession, or which is reasonably obtainable, … and the Architect is entitled to rely on such information.”
Clients wishing to limit their liability with respect to information provided would be well-advised to amend this clause. Other changes in favour of clients include:
- the default interest rate for late payment has been reduced from 8% over the Bank of England base rate to 5%; and
- the client no longer has to pay the architect’s legal costs on an indemnity basis in situations where the employer is unsuccessful in a dispute.[4]
Conclusion
The above examples represent only a few of the amendments included in the new RIBA Agreements 2007. Both clients and architects should be particularly aware of these new amendments to ensure they understand what exactly they are signing up to. Whilst the objective was to create a flexible suite of contracts which balanced the risk between the parties, further contentious issues have now been created which ultimately have jeopardised a successful first year.[5] In conclusion, users should not get too comfortable with the 2007 suite as it is likely that we will see significant revisions over the course of the next year.
[1] The Consultant Switch/Novation Agreement has recently been with withdrawn for sale from the RIBA Bookshop website due to the RIBA’s recent review of the 2007 Agreements. The website recommends that the CIC’s Novation Agreement is used until the review has been completed. This is yet another indication that the new agreements have not had a successful first year.
[2] 1999 Standard Form of Agreement for the appointment of an Architect, revised April 2004 and the Conditions of Engagement for the appointment of an Architect.
[3] [2002] EWHC 2923 (TCC) In this case Judge Toulmin QC held that the adjudication procedure was unfair to consumer clients as “a procedure which the consumer is required to follow, and which will cause irrecoverable expenditure in either prosecuting or defending it, is something which may hinder the consumer’s right to take legal action”.
[4] A direct result of the 2005 case Munkenbeck & Marshall v Michael Harold [2005] EWHC 356 (TCC).
[5] As a result, the ACA, when refusing to endorse these new agreements, stated that it will be publishing its own standard form of agreement prior to the summer of 2008. However, as of mid-August 2008, the industry has yet to see any sign of it.