RIBA has published a new suite of standard agreements for professional services 8 Jul 2010
The Royal Institute of British Architects has recently published a new suite of standard agreements for professional services, which replace the 2007 editions. The 2010 suite consists of one standard agreement for a Consultant, two agreements for an Architect (long and short form), a sub-consultant agreement and a domestic project agreement.
Developer clients should examine these agreements carefully before signing up as the changes tip the balance further in favour of the Consultant/Architect.
•What are the key changes to the Architect and Consultant long forms?Shorter and more user-friendly: The layout is clearer and one short booklet containing the project specific information replaces four 2007 schedules.
•Express ‘no set off’ clause: The Client is now expressly prevented from withholding any amounts due to the Consultant/Architect under the agreement unless that amount has been agreed with the Consultant/Architect or a tribunal has decided it is not due. The Client’s right to set off at common law and equity are still excluded, as previously.
•Cap on liability: As in the 2007 edition, there is a cap on the Consultant/Architect’s liability (in addition to a net contribution clause). While the 2007 edition offered the parties’ the freedom to specify the level of the cap, the new standard provides that the Consultant/Architect’s liability will not exceed the level of its professional indemnity cover, provided its insurers have been notified.
•Termination: The Consultant/Architect can now terminate in the same circumstances as the Client, that is, in any circumstances with reasonable notice. The 2007 suite allowed the Client to terminate at will, with notice, but restricted the Consultant/Architect’s right to do so to specific scenarios, e.g. where the Client suspended the Consultant/Architect’s services for more than six months.
•Late payment: Interest on late payments properly due by either party (as opposed to just late Client payments in the 2007 edition) now accrues at a rate of 8% over the Bank of England rate – the 2007 suite had reduced this from 8% to 5%. The payee is also now entitled to any costs reasonably incurred in obtaining payment of unpaid sums.
•Confidentiality: The Consultant/Architect’s confidentiality obligations are subject to reasonable skill, care and diligence whereas in the 2007 suite these obligations were absolute.
•Basis of PI cover: The Consultant/Architect’s professional insurance cover is now on an aggregate basis, which means that the cover (of say £10m) can be divided between different claims (say £1m for 10 different claims). This contrasts with the 2007 suite where cover was on an ‘each and every claim’ basis (where, on our example, £10m cover would be available for every claim made arising out of the same cause).
•Exclusions: There is an express clause that the Consultant/Architect is not warranting that planning permission or other approvals will be granted either at all or within a given timeframe.
The new agreements have been endorsed by leading organisations including the Royal Incorporation of Architects in Scotland (RIAS), the Association of Consultant Architects (ACA), the Royal Society of Architects in Wales (RSAW) and the Royal Society of Ulster Architects (RSUA).
We expect that these changes to a standard form that was already weighted in favour of the Consultant/Architect will make developers even more cautious about adopting these forms either without amendment or at all. The decision will inevitably come down to the respective bargaining strength of the parties.
This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com.