Today's article from Tuesday Mornings for Construction opens another series in which we present the most important issues related to design contracts. In this article, we will discuss the scope and subject matter of the contract with an architect.
A contract with an architect is essential whether ordering a custom home design or a developer intending to build a residential development. The construction of a single-family home or residential development must always be based on a construction design. Such a design can only be prepared by a person with a building permit and a member of the appropriate professional association.
In accordance with Rule 3.7 of the Code of Professional Ethics for Architects , Architects shall not undertake to provide professional services unless the parties have agreed in writing on the following terms: (i) the purpose and scope of the work, (ii) allocation of responsibilities, (iii) limitation of liability, (iv) budget/costs of the project, (v) fee or method of its calculation, (vi) provisions specifying the conditions for termination of the contract.
In our experience, a design contract most often takes the form of a contract for specific work. Therefore, the content of such a contract involves the architect (the person accepting the order) committing to carrying out the work (construction design) and the investor (the client) paying a fee for the work.
A contract with an architect must include provisions regarding the subject matter of the contract. The type of design the architect is to prepare should be specified. Furthermore, the contract should specify the characteristics of the facility to be designed by the architect (type, size, type of construction), as well as information regarding the construction site, location, terrain characteristics, and conditions specified in local zoning plans. This will clearly define where and what type of facility the construction, conceptual, tender, or even execution design will cover.
The parties should specify in the contract the method of remuneration for the architect (lump sum or cost estimate) and indicate specific rates for individual activities; in addition, the deadline for payment and the terms of payment should be specified, i.e. primarily after acceptance of the delivered work.
Moreover, the parties in the contract with the architect should specify the deadline for the completion of the service, as this provision will enable the introduction of provisions regarding contractual penalties for late completion of the order.
Another issue that requires regulation in the contract in question concerns the rules for termination and withdrawal. It is clear that in the event of a prolonged delay in project completion, or if the architect submits a design that is inconsistent with the design specifications and then refuses to make any corrections, the client should have the right to terminate the contract with the architect. Since design contracts typically take the form of contracts for specific work, civil law will apply in this case. The client has the right to terminate the contract at any time, without providing a reason. However, in this situation, the client is obligated to pay the contractor a portion of the agreed fee, which will cover the cost of work completed to date. Termination of the contract with the architect may also occur due to defects in the work. In such a case, the contractor is obligated to repair the defects within a specified period. If the defects are significant and the client fails to do so, the client may withdraw from the contract.
In the design contract, the architect may also be entrusted with additional activities, i.e.: (i) obtaining the relevant documents for the ordering party (basic maps, conditions for connection to the network), (ii) performing authorial supervision during construction, (iii) representing the ordering party in administrative proceedings (issuance of development conditions, granting a building permit, ordering and collecting documents), (iv) preparing the investor’s cost estimate.
Furthermore, a contract with an architect should address issues such as the architect's liability and obligations, as well as copyright regulations. We invite you to read our upcoming articles to discuss these issues.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of November 29, 2022
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