Practice Management Member Conversations

I have been adding the paragraph below to our B101 Standard Agreement between Owner and Architect under Article 2 for the past 18 months and have not had Owners strike the language. I'd like input from my colleagues regarding this paragraph and whether any of you are attempting to add such clarification language into your agreements.

2.3 Nothing contained in this Agreement shall require the Architect to exercise professional skill and judgment greater than that set forth in Section 2.1 hereof (the "Standard of Care").  Architect makes no warranties, express or implied regarding the adequacy of the Instruments of Service or the outcome of the Project.  This limitation shall not be modified by any certification or representation made by Architect as an accommodation upon request of Owner.  Architect shall not be responsible for any failure to follow or apply any knowledge or techniques which were not generally known, acknowledged or accepted as of the time during which Architect is performing his services under this Agreement.  The parties acknowledge that no set of plans and specifications is entirely free of errors and omissions and that the existence of an error or omission does not automatically constitute a breach of the Standard of Care.  The parties agree that the amount of 3% of the cost of the Project represents the minimum threshold amount below which the impact of designer- responsible changes on overall Project cost would be considered within the range expected from competent professionals and therefore in accordance with the Standard of Care.  In any event, all costs of Architect's errors, omissions or other changes which result in "betterment" or "value added" to the Owner shall be born by the Owner, not the Architect, (to the extent of the betterment or value added) and shall not be the basis of a claim.  The Owner shall establish a reasonable contingency line item in the construction budget to cover additional costs resulting from errors and omissions, and the Architect shall not be liable therefor unless the errors and omissions both exceed a reasonable contingency amount and constitute a breach of the Standard of Care. 

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Michael Kadow AIA
President ' Principal Architect
Somerville, Inc.
Green Bay WI
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Much of that language is fine if you can get it.  Establishing a contingency threshhold like that is appealing, but there's also danger in placing a dollar value on the standard of care.  By applying an objective criteria to what has always been a subjective determination, you may make it easier on yourself when you're within that 3%, but harder on yourself when you're over that number.  In assessing whether it's work the risk, you'll also want to consider how your insurer might view that threshhold clause.
 
As for that betterment language, assume an architect omits a necessary element from the design, that it's discovered during construction, and that the owner issues a change order to add it.  The damage caused by the architect's negligence is measured by the difference between the cost of having that item included at the bid stage and the cost of adding it as a change order.  The architect should be responsible only for that premium, to avoid a windfall (or "betterment") to the owner.  This is common sense, but sometimes gets lost by judges, so I've seen it added to contracts by way of clarification.  But your clause says "all costs" of errors that "result in" betterment are on the owner.  It reads as if you're asking for a waiver of something the owner had a right to recover in the first place.  The whole point is to clarify that certain damages aren't caused by the architect's error or omission at all.  And by making appear like a waiver rather than a common sense clarification, it makes the negotiation harder.

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Martin Onorato
Robinson & Cole LLP
Hartford CT
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