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 10th 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
Architects will be familiar with liens arising because money due and payable through a certificate for payment did not find its’ way to a subcontractor or supplier. Architects may be less familiar with liens arising because funds did not flow to sub-consultants or suppliers. RFPs often contain clauses requiring contractors to vacate or discharge liens. This requirement is now being imposed on architects.
Example Clause 1:
.1 In the event that a construction lien is preserved against the Project by anyone claiming through the Architect, the Architect shall, at its own expense, forthwith take whatever steps may be necessary to vacate or discharge the lien, as the case may be, including the posting of security into court. In addition, the Architect shall take all further steps necessary to protect the interests of the Client, including, but not limited to, providing a defence to the Client in any lien proceedings. Should the Architect fail to do so, the Client may take any measures the Client deems necessary to vacate or discharge the lien, defend the lien proceeding and deduct all costs of doing so from fees and expenses owing to the Architect.
If anyone claiming through the architect preserves a lien because they have not been paid (whether or not the architect has properly paid), the architect must pay out of pocket to have the lien vacated or discharged. Legal fees to defend a client accumulate quickly. Professional liability insurance does not pay the defence costs of a third party, so any such legal fees that you agree to will come out of pocket and may quickly exceed the architectural services fee for a project.
In addition, there is no compensation from the client for dealing with false or vexatious liens.
The final phrase is another instance of the right of set off.
Example Clause 2:
.2 The obligations of the Architect pursuant to this GC shall not apply to a construction lien arising solely because the Client failed to make timely payment on proper, undisputed invoices rendered to the Client by the Architect or to a construction lien arising because the Client has given instructions to the Architect’s Consultants to perform extra work or services without the privity of the Architect.
If the Client is anything less than 100 per cent responsible, the architect is entirely responsible for the requirements of OAA 600 GC14 paragraph .1. Even if the client is 100 per cent responsible, if the reason was anything other than failure to make timely payment, the architect is entirely responsible for the requirements of paragraph .1. This is unfair and disproportionately shifts the rise to the architect.