Know the form

Legal
Contracts just got easier with the RIBA’s Appointment Agreements 2010, but while they protect architects’ interests better the odd sticking point remains, says Alistair McGrigor

In June, the RIBA launched its Appointment Agreements 2010.  But what makes this set of standard conditions for appointing an architect better than the previous (2007) ones?
To start with, the new form is clearer and easier to use. The wording of the 2010 forms has got rid of the NEC-style use of the present tense, the clauses are shorter and the numbering is more frequent. And because the new form also incorporates Construction Act provisions into the main body of the text, rather than having them as a schedule, it is easier to follow than its predecessor.

Photo boon
There are a number of useful new clauses too. For example, the 2010 document gives the architect the right to publish photographs of the project.  Previously there would often be no express agreement on this.

Other previously implied matters are also now clearly set out.  For example, under the 2010 appointment, the architect is expressly not responsible for the competence or performance of other consultants appointed by the client.  Similarly, the architect expressly does not warrant compliance with the construction cost and/or the works programme.

The 2007 provision giving the client the right to remove any of the architect’s personnel whose performance was unsatisfactory has been ditched.  The new form also reduces ‘red tape’, by removing the architect’s obligation to inform the client it has completed its services.

Looking at fee protection, the 2010 form has clarified the different scenarios in which an architect can claim additional fees over and above the basic. Such triggers include changes to the brief or programme, and events which are outside the architect‘s control.

The RIBA has amended the copyright clause, so that use of copyright after the date of the last services performed will entitle the architect to be paid a licence fee. This prolongs commercial leverage for the architect if the client uses the copyrighted material.

One major improvement is a cap on the architect’s liability – at the level of its professional indemnity insurance. This should avoid arguments over the level of these caps, for example where the architect’s insurance is held on an aggregate basis but the client insists on an ‘each and every claim’ cap.  However, it may, of course lead clients to put pressure on architects to increase their professional indemnity insurance and so raise the cap.

Late penalty
Some changes in the 2010 form are more questionable.  One is the decision to raise the interest rate for late payment from five to eight per cent above the Bank of England base rate.  Although in line with current statutory regulations on late payment, it seems prohibitively high, and I suspect many commercial clients will not agree to pay it.

The architect and client now have the same rights of termination. This is an improvement, although it now occurs by the client or architect giving ‘reasonable notice’ to the other. Although this is an attempt to reflect the consideration that the previous 14 days’ notice might be unreasonably short, the change does not seem to offer any greater certainty.

Finally, a small point, but one which may affect you personally.  In the 2007 form, the conditions allowed individual directors and employees to rely on clause 7.2.2, which permitted the client only to bring claims against the architect company, not individually against directors or employees.  In the 2010 form, clause 7.2.2 still exists, but the clause permitting employees and directors to rely on it directly has been removed. My top tip therefore is to refer to ‘clauses 7.7.2 and 7.2.2’ in clause 7.8 of the new 2010 form.

Alistair McGrigor is a senior associate with solicitor Nabarro

In plain English
Time is a relentless pressure, but what makes it really of the essence?

Time of the essence
Time is not considered to be a fundamental term in most building contracts, and therefore it is not ‘of the essence’.  An employer cannot terminate the contractor’s employment simply because the contractor has not delivered the project to it by the completion date. 

However, if the employer makes time of the essence and the contractor fails to perform an obligation in accordance with the date or time specified in the agreement, the employer will be entitled to terminate the agreement and claim damages.

Time of the essence may take the form of express or implied provisions. Express provisions may simply contain the judicially-recognised phrase ‘time is of the essence’, or state that one party may terminate the contract if the other fails to perform an obligation within the specified time. 

Time of the essence will not be effective if it is inconsistent with other terms of the contract – for example, a provision which penalises the parties for delay (say liquidated damages) or if there is any contemplation of a possible deferral of completion.

Time being of the essence can apply in consultant appointments, although obligations under these are usually subject to a lower test of reasonable skill and care.