Avoiding Blame and Managing Risks
With an understanding of the circumstances that give rise to potential claims, the design professional has the ability to structure its contracts and business practices to avoid claims. The same contracts that courts construe as imposing a duty on the design professional to the owner, contractor, or surety can also be used to avoid, or at least minimize, a design professional’s exposure. In other cases, equitable doctrines, procedural formalities, and statutes can further deflect tort and contract claims. Problems arise, of course, when courts change the rules.
A. Contract Drafting
No matter who is the plaintiff, claims against design professionals often arise from an expressed or implied undertaking by the design professional. To refute the implied undertakings, a carefully drafted contract can go a long way towards keeping design professionals out of court or providing solid defenses to claims when litigation cannot be avoided. Contract provisions continue to evolve to limit the design professional’s scope of responsibility and amount of liability.
i. Clearly Defined Scope of Work
Design professionals should not undertake work on any project without defining the work that the owner expects to pay for and the architect expects to perform. Without a clearly defined scope of work, any person involved in the project—even those without a business relationship with the architect—can claim that the architect agreed to do (or not do) virtually anything. After all, design professionals rarely intend to be the guarantor of a contractor’s work. When written expectations are unclear, the architect can find itself accused of making representations that it never considered or intended.
ii. Avoiding Warranties, Certifications, and Guarantees
Terms used in contracts are sure to be scrutinized—some would say twisted—in litigation. Consider the standard Application and Certificate for Payment, AIA Document G702. An architect that signs off on the standard form may be getting more than he bargained for. AIA Document G702 provides:
In accordance with the Contract Documents, based on on-site observations and the data comprising this application, the Architect certifies to the Owner that to the best of the Architect’s knowledge, information and belief the Work has progressed as indicated, the quality of the Work is in accordance with the Contract Documents, and the Contractor is entitled to payment of the AMOUNT CERTIFIED. (bold added for emphasis)
Though the term “observation” is preferred over “inspection,” “visit” might be the most accurate term to describe the architect’s actions in conjunction with a certificate for payment. If site visits do not provide ample information for the architect to certify that the work has progressed as indicated and that the quality of the Work is in accordance with the Contract Documents, the architect should not “certify” anything. Furthermore, for the Work to be in accordance with the Contract Documents can be argued to mean as set out on the designer’s drawing. It is virtually impossible for all work to be accomplished exactly as drawn. Not only that, it may be impossible to tell on a brief visit if some work is remotely close to the designer’s specifications, especially when other work is performed on top of that work.
With these realities in mind, and to the extent possible, architects should attempt to draft their payment certifications to read less like warranties and more like estimates. An example of alternative language that may be used is as follows: In accordance with the Contract Documents, based on the Architect’s limited visits to the Project site, it is the Architect’s opinion and belief that the Work has progressed as indicated, the Work appears consistent with the Contract Documents, and the Contractor is entitled to payment of the amount certified.
iii. Construction Observation vs. Construction Inspection
On some projects, the architect finds itself in a strange position. The owner probably likes the idea of a knowledgeable professional at the site, even if only a portion of the time, to observe the contractor’s work and determine if the work is performed correctly. The architect wants to visit the site to see how work is progressing and to answer the contractor’s design-related questions before the work is performed. But without the owner and architect’s expectations being clearly defined, the owner may allege (as many have over the years) that the architect was negligent in failing to report deficiencies in the contractor’s work. The architect is shocked by the allegation because the owner declined to pay the architect for construction services when the parties negotiated the contract and the architect only agreed to visit the project once a week.
The specific language in the contract matters, and care should be taken to ensure that the language reflects the parties’ expectations. After all, an architect that agrees to be paid for weekly observations has shouldered a greater burden than the architect who has agreed in his scope of work to make only three visits at predetermined project intervals. The contract should be drafted to accurately reflect the risk that the parties agree to bear. As discussed above, it should come as no surprise that the owner might not be the only one to try to rely on the architect’s contract.
B. Defensive Architecture
It is a rare project when the parties know litigation will result while the work is in progress. However, there are some business practices that architects can implement to minimize the potential exposure that a lawsuit might bring. While certainly not an exhaustive list, good documentation, good communications, and staying within the scope of work can provide the foundation for a solid defense. If there is a common thread in lawsuits against architects, it would be an allegation that the architect did, or did not do, something that the other party thinks the architect should have done. Whether the architect was commenting on shop drawings, approving payment applications, preparing change orders, answering requests for information, visiting the site, or completing a Certificate of Substantial Completion, communications can go a long way toward managing expectations, explaining what was done, and why. But good communication coupled with good documentation is better.