Chapter 5: Bespoke professional appointment wording
. Overview of bespoke forms
.. Why would a client propose a bespoke form of appointment?
If a client has sufficient resources to do so, they may propose to use a bespoke form of professional appointment. The expense to the client comes not only from the fact that a professional legal advisor will have been required to put the document together initially, but also from the likelihood that an architect will not be willing to accept bespoke terms as drafted without proposing amendments, whether the amendments suggested come from the architect’s own experience or from their legal advisors or insurers. The client’s legal team will be required to conduct any negotiations to settle an agreed form.
Because of the potential additional expense, the client will need to have a good reason to use a bespoke form; if the client is a regular user of architectural services, or a job is particularly complex or high value, the client may consider that the standard forms on offer, including the RIBA Standard Conditions, do not provide sufficient protection.
It almost goes without saying that the use of a bespoke form of appointment is likely to increase costs for the architect too. Agreeing a non-standard form, without taking legal advice and seeking insurer approval, is not sensible practice. The cost of obtaining legal advice can be significant, although some insurers and insurance brokers provide a ‘contract review’ service as part of the overall PII package, under which they will arrange for solicitors to provide comments on a draft appointment form for free. Discuss this with your broker. Typically, this advice will be limited to issues that may affect cover under the architect’s insurance policy; this is a different focus from the ‘full commercial review’
that an independent solicitor would provide if instructed to review a draft appointment. If an architect does have to seek advice from an independent solicitor, the client may be willing to pay or contribute to these costs; in other cases, the architect might factor their legal costs into the fee in another way.
There may be occasions when architects, particularly large and international practices, have and propose their own bespoke forms.
However, this chapter concentrates on bespoke forms put forward by clients, where the reasoning behind the terms being proposed, and their effects in practice if accepted, can be obscure.
Client bespoke forms will be drafted to shift the balance of risk in favour of the client in many, often subtle, ways. This chapter sets out areas where bespoke appointments are likely to be more onerous than the industry
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standard forms. Not all of these points are going to be worth fighting over every time; it is for the architect and their legal advisor to decide what is important on a project-by-project basis, and to assess the relative strength of the bargaining positions of the architect and the client in each case. It is rare that a legal argument is so persuasive on its own that it will convince the other party to agree an amendment. Each negotiation is a mixture of legal argument and commercial pragmatism to achieve an overall compromise.
.. How does a negotiation progress? How do I express my preferred amendments?
If the bespoke form is proposed by the client, the client’s solicitor will usually get the ball rolling by sending out an initial draft. The draft should have been properly tailored to the nature of the project, but this is not always the case and you may need to spend some time striking out obviously inappropriate provisions.
How should the architect indicate the areas they cannot accept? There are three main options:
t Manuscript mark-up of the appointment (handwritten amendments).
This is not best practice because of the potential confusion that may result from having to decipher an individual’s handwriting squeezed onto a page.
t Electronic mark-up, tracking the changes proposed by the parties at each stage in the negotiations (often shown in different colours depending upon the software used). Electronic mark-ups are very useful tools, but can themselves create confusion if, for example, the clause numbering changes when individual provisions are deleted or if, when a dispute arises, only a black and white hardcopy of the mark-up remains.
t Electronic schedule of comments in the format: ‘clause number – comment’. This is arguably the clearest way to record proposed amendments and track the negotiation, although it is also potentially the most time consuming.
The architect should always insist upon seeing a final draft for review, in both clean and ‘track changes’ versions, before a document is sent out by the client for signing (‘execution’).
What if the client says there will be no amendments?
Some clients profess to be unwilling to consider any amendments to their proposed form, particularly clients with an effective monopoly in their respective areas, such as major transport or utilities companies. But in a
Chapter 5: Bespoke professional appointment wording
commercial world it is usually possible to achieve a fairer balance in the appointment document, even if ‘no amendments’ is the client’s opening position. The architect may have particular concerns which are potential
‘deal-breakers’, issues that may either make it not commercially viable for them to take the job on or which may compromise coverage under their PII policy. An architect should always raise at least these points with the client, however strongly the client has stated that they will not accept any amendments. Your insurer may be willing to agree a specific one-off endorsement to your PII policy if the client is unwilling to compromise on a particular provision that may create a coverage issue.
If everything else is favourable – the architect’s proposed design, their approach, the fee, the personalities – then a client will generally be open to a compromise on particular terms of the appointment. But no appointment is risk free.
. Discussion of particular forms of words used in bespoke appointments
.. Defined terms
A bespoke appointment will usually have a clause setting out the meaning of certain terms which appear elsewhere in the appointment, signified by beginning with capital letters. A client may wish these meanings to be wider (or narrower, as in the example of ‘Additional Services’ below) than the architect had anticipated. For the architect to understand how the definition may work to their disadvantage, they must cross-refer to the other parts of the appointment where the defined terms appear.
Examples are given below.
‘Additional Services’
‘any substantial additional services which are not foreseeable by the Architect at the date of this Agreement, provided that design changes made in discussion with the Client and the preparation of alternatives before such design is finally agreed by the Client shall not constitute Additional Services.’
The intention of this wording is to restrict the architect’s ability to claim additional fees even though they have a legitimate claim because they have carried out additional work over and above their basic services.
There is no reason for an architect to accept such a restricted definition of what is additional; this does not represent the market norm.
The use of the wording ‘not foreseeable’ is harsh because it is not subject to a standard of reasonableness. The client will argue that the architect
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should have foreseen that the additional services provided were going to be required and therefore the client should not pay for them. A similar effect is created by wording requiring the architect to provide the basic services and in addition do all things that ‘may be reasonably implied by them or are reasonably incidental to them’. But the architect needs to know with certainty what their basic services are and, from that, what will be additional; it is impossible to provide an accurate fee estimate without this information, something which is not helpful to the client or the architect.
The wording relating to design changes is indicative of a growing trend for clients to seek redesign for free as part of a ‘value engineering’ exercise or series of such exercises on a project. This is a misuse of the term value engineering, which when used correctly is about innovation through design to reduce cost. The risk being considered in this section is where the client seeks to oblige the architect to redesign down to cost.
This could involve significant redesign by the architect, but the likelihood is that the need for designing down will not be, or not be exclusively, the fault of the architect. It is for the quantity surveyor, usually, to keep track of likely expenditure. If the quantity surveyor only realises late on in the design process that a project is over budget, and that cost savings can only be made if the design is changed, the amount of work thrown away and work which must be redone can be huge. It is unreasonable to expect the architect to bear their own costs of the redesign in these circumstances, and such work should be treated as an additional service.
Ideally the architect’s right to additional fees for such work should be expressly stated in the appointment. Ideally the architect should also be allowed some input in agreeing cost changes, and should ensure that the quantity surveyor’s appointment requires the quantity surveyor to seek the architect’s input before changes are made.
‘Brief’
‘The initial statement of the Client’s requirements as the same may be developed or varied from time to time.’
If the brief does change significantly, and the architect finds that the building they are designing is substantially different from the one which they originally agreed to design, any additional work required must be paid for as an addition to the basic fee. This is normally not controversial, but it is vital that the architect keeps track of changes from the initial brief.
Development of the brief may be inevitable, but a wholesale change in the scope of the design is something that should be notified to the client,
Chapter 5: Bespoke professional appointment wording
an instruction sought, and an increased fee agreed, before the additional work takes place. It is so important to keep on top of these changes; lots of little adjustments can cumulatively amount to a significant deviation from the initial brief.
‘Documents’
‘All drawings, models, plans, elevations, sections, perspectives, specifications, schedules and any other works and documentation produced or to be produced by or on behalf of the Architect as part of the Services including any designs contained in them’
This definition will link in with a ‘copyright’ clause in the main body of the appointment. A client will expect to receive a copyright licence in relation to all of the documents, as defined, or in the worst case may even expect copyright in the documents to be assigned to them. The use of the words
‘by or on behalf of’ require the architect to secure the right to grant a copyright licence from any other party whose copyrighted material the architect has incorporated into the work they have produced. This can be extremely difficult to achieve in practice, so at the very least the obligation in relation to third party copyright should be subject to a ‘reasonable endeavours’ obligation – an obligation to do only such things as are commercially reasonable, rather than everything possible, to achieve a copyright licence for the client from such third parties.
In addition there should be an express exclusion in relation to proprietary products, such as computer software, whose originators are unlikely to be willing to grant copyright licences without a formal fee arrangement, if at all.
‘BIM’: building information modelling/management
The architect may be required by their appointment to collaborate with all of the other designing contractors and consultants on the project through BIM. BIM is described in detail in section . of the RIBA Architect’s Handbook of Practice Management (eighth edition). As the authors note:
BIM is not just the software that facilitates the team’s delivering a single-project model, or the way that model is stored and accessed; it is the process through which the whole team collaborates and co-ordinates the design towards a common output.
The perceived advantages of BIM include the promotion of more efficient team working, enhanced clash detection, easing the integration of architectural design with mechanical and electrical services, structure and programming, and providing a focus for design meetings.
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It is vital that, in the context of BIM, the architect’s appointment makes very clear that they shall not be liable for the work, acts or omissions of others.
BIM dates back to the s, but the potential advantages and pitfalls are still being discovered; the following questions remain to be resolved:
t Who owns the copyright in the design if all consultants and specialists have collaborated on a single common output?
t Can BIM create liability between designing parties? How does this sit with the legal doctrine that contractual liability is generally only possible between parties to a contract?
t What is the best way to audit design changes and track who has done what and who is meant to do what?
The RIBA Plan of Work has been developed to embrace the use of BIM and the design management processes and leadership issues referred to in the BIM Overlay to the Outline Plan of Work are embedded in the new Plan of Work, specifically in the Key Support Tasks bar and the references to the need for a project execution plan and a technology strategy.
‘Losses’
‘All losses, costs, claims, demands, actions, damages … and liabilities, including legal expenses.’
If the main body of the appointment makes the architect liable for the client’s losses as a result of particular breaches of contract, you should check whether ‘losses’ has been defined. The intention may be to create an ‘indemnity’ under which the architect is liable to the client for a far more broadly defined range of losses than would ordinarily be recoverable for breach of contract. This should not be accepted. This is an important issue for architects, because PII policies are generally based on the more restrictive common law definition of the losses that can be recovered.
‘Third Party Agreements’
‘Each and every agreement relating to or affecting the Project which has been or shall be entered into by the Client from time to time and disclosed to the Architect.’
A definition such as this will usually be linked to a clause in the main body of the appointment obliging the architect to perform their services so as not to cause or contribute to any breach of such agreements by the client.
This should generally not be accepted without qualification.
The architect’s primary duty is to carry out their services for the client, exercising reasonable skill and care. There is no reason why this should
Chapter 5: Bespoke professional appointment wording
necessarily be compatible with the client’s obligations under agreements with third parties. For example, the client may enter into an agreement for lease with a potential tenant that includes a penalty if the building is not completed by a strict deadline. But the architect’s duty is to use reasonable skill and care, not to guarantee completion of the building on a particular date.
If the client is insistent, then additional wording may be proposed providing that the architect’s obligation to carry out their services in compliance with any third party agreement is subject to the terms of the appointment itself taking precedence in the event of any discrepancy or conflict between the terms of the third party agreement and the appointment. Failing that, the architect should insist on an additional fee to cover the potential risk that any services provided under the appointment may cause or contribute to a breach of the third party agreement; or add wording such that only a breach of the appointment or negligence would fall within the scope of the obligation – not the simple fact of performance of the architect’s services.
Finally, the architect must ensure that their obligation in relation to third party agreements is only effective to the extent that the architect has received a copy of any such agreement prior to commencing their services;
the architect cannot reasonably be expected to carry out their services in compliance with a document they have not seen. The architect should be entitled to recover the additional costs of re-doing any services that need to be amended to comply with a third party agreement that the architect had not seen at the time they carried out the services in question.
.. Entire agreement
‘This Agreement supersedes any previous agreements or arrangements between the parties in respect of the Services and represents their entire understanding in relation thereto.’
This ‘entire agreement’ provision is intended to prevent the architect from seeking to rely on any promises or agreements made during the course of negotiations – for example, a promise by the client to pay an additional fee if the architect’s services are not required beyond the planning stage. This is not necessarily a problem for the architect, but it does mean that if there is something that was agreed during the pre-contract negotiations, or some assurance given, on the basis of which the architect was persuaded to enter into the appointment (and on which the architect may later want to rely) then the architect must ensure that the agreement or assurance is included in the written terms of the formal appointment.
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.. Effective date
‘The appointment of the Architect shall be deemed to have commenced with effect from the date of this Agreement or, if earlier, the date upon which the Architect shall have begun to perform the Services.’
If significant services have been carried out prior to the date of the appointment, such an ‘effective date’ clause can create problems for the architect. This is particularly true if the appointment imposes additional conditions or standards of performance – such as the requirement to comply with the terms of a third party agreement – that the architect was not aware of at the time they began performing the services. If there is any question of the architect’s prior performance being in breach of the appointment terms subsequently proposed, the architect must insist that the appointment commences on the date it is executed and no earlier.
Failing that, the architect could propose that if any work carried out prior
Failing that, the architect could propose that if any work carried out prior