What You Should Know, What to Look For, and What to Be Wary Of
The OAA continues to review RFPs and contracts with the intent of identifying requirements and/or provisions that:
- may be uninsurable;
- require an architect or Licensed Technologist OAA to contract out of their professional obligations as set out in the Architects Act and Regulation 27;
- are a contravention of either piece of legislation; or
- unreasonably increase their obligations beyond those at law.
Neither the following nor the article linked to constitute legal advice. This is the ninth in a series of excerpts from Practice Tip 39.1 that should assist practices in making a 'go/no go' decision with respect to responding to an RFP or in contract negotiations. Members should familiarize themselves with all of 39.1 and refer to it when reviewing RFPs, and bid and contract documents.
To read previous excerpts in this series, click here.
2. Examples of Specific Contract Language of Concern Examples of Specific Contract Language of Concern
The arbitrator of a client/contractor dispute may make a finding based on the evidence presented that the architect is at fault and therefore liable. Unless the architect is a party to the arbitration, there is be no opportunity to question the evidence or to provide a defence. The arbitrator’s findings may later be used against the architect with Pro-Demnity or another insurer having had no opportunity to present a defence or to have other relevant consultants involved in the process.
Example Clause 1:
Delete OAA 600 GC 4.5 and replace with the following:
In no event shall any decision made, approval given or review conducted by the Client limit, relieve, reduce or release the Architect and its Consultants from any and all of their obligations, duties or liabilities under this Contract.
Implications:
By deleting the provisions in OAA 600 and replacing them with an unrelated topic, this clause subtly removes the right of architects to choose to be part of any arbitration of dispute between the client and contractor.
Example Clause 2:
If [the client] has entered into contracts with any other parties which provide for a submission to arbitration in the event of a dispute and should the dispute involve the consultant in some manner, [the client] shall be entitled by written notice delivered to the consultant identifying the dispute and have the matter and the consultant’s involvement determined in the same arbitration and the consultant by executing this Agreement shall be deemed to have consented to be a party to and by bound by such proceeding as though it were a signatory to a written submission to Arbitration.
Implications:
The architect by agreeing to such a clause gives up any choice as to whether they participate in the arbitration or not, and as to the manner of that participation. This may impact the ability of an insurer to mount a defence, to settle without arbitration or to pursue a different dispute resolution process, and may result in exclusion from coverage. Further, by consenting to be a party to such proceeding, the architect may find that they have agreed to pay an equal portion of the cost of the arbitration, regardless of the degree of their involvement in the dispute being arbitrated.
Recommendations
It is as important to review what is being deleted as it is to review what is being added or what it is being replaced with.
One recommended approach is to add a supplementary condition to the construction contract stipulating that when an architect is not involved in an arbitration, the parties to the construction contract agree that neither can use the result of the arbitration in support of any subsequent proceedings against the architect.
Avoid agreeing in advance to anything where the potential liability, scope, impact, or costs are undefined or ill-defined or which limit the architect’s options before the circumstances are known.