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;
• contravene either piece of legislation; or
• unreasonably increase their obligations beyond those at law.
Neither the following nor the following constitute legal advice. This is 14 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
2.14. Time is of the Essence
The use of the legal phrase “time is of the essence” has a very specific meaning and implications related to breach of contract and professional liability insurance coverage.
Examples
Example Clause in RFP:
Consultant agrees that time is of the essence
Example Clause in Contract:
Consultant agrees that time is of the essence in the performance of services. The Consultant agrees to prosecute the services with all due diligence and to complete the services within the time stated in the contract documents.
Implications
Where “time is of the essence” has been agreed to, practices should be aware that the phrase applies to both parties to the contract, imposing strict time requirements on the client as well.
If agreed to, “time is of the essence” becomes a contractual obligation and if the architect fails to meet any of the time requirements, the practice can be liable for breach of contract even in the absence of any error, omission or negligence, and if not meeting the strict time requirements is caused by others. This voluntary assumption of liability may lead to the loss of insurance coverage.
Recommendations
Replace “time is of the essence” with “time is critical.”