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The AIA A101 is the standard form of agreement furnished by the American Institute of Architects which is used in generating well-defined business relationships between a Pand a contractor. These contracts have been crafted, published, and promoted by a very influential and nationally renowned industry group. Consequently, the standardized version is designed to protect the interests of the contractor and can be protective of a contractor to the sometimes-costly detriment of the rights and flexibilities of the owner.
Because of this often-inherent imbalance in the standard form agreement, negotiating contracts between owners and contractors requires a great deal of time and attention to detail. At Pierce & Kwok, we regularly represent (in, to be clear, wholly separate deals) both owners and contractors, and so are able to fully understand the exposures and interests of both sides. Regardless of which side of the table you are on if you do not make sure that your rights are protected, the standard agreements may not be advantageous to you in the event of a dispute.
It is essential that both owners, and even contractors, contact counsel to determine if the AIA contract at issue is protective of their interests.
Require a Detailed Customized Agreement
To begin, the standard form contract often fails to sufficiently define the term work and, because construction is usually so multi-layered, it is necessary to provide thorough definitions each step of the way. Ultimately, the contract cannot practically describe every nail, piece of wood and joist utilized, so some inferences are necessary, but, the better the descriptions and definitions included, the safer all parties can feel about moving forward.
For example, let’s say I am going to have a wall built. Several supports and joists will also be likely necessary. It’s reasonably inferable that included in this project will be all the labor, material, equipment, tools, supplies and scaffolding, etc., i.e. everything one can expect is necessary to complete the job. But is it?
You need a detailed agreement. Why? What happens if a dispute arises regarding an aspect of the work? Or its timing? Responsibility for shoddy work, or delay, must be strictly delineated.
Always include commencement and deadline dates. The contractor should advise the owner of any inconsistencies in the contract documents, as well as clarify the order of precedence of the staging of each step of the construction.
There will be occasional conflicts or inconsistencies. If there are, clarification is necessary and must be supplied by the Contractor. Otherwise, they’re able to take the path of least resistance, accomplishing easiest tasks first, even if practicality or logic dictate otherwise.
Department of Buildings (DOB) and Permits
Further, be clear as to who is responsible for applying for and acquiring the permits. Sometimes the contract will say, “Contractor will work only pursuant to all the legal and necessary permits required by the state, federal, and municipal law.” Who has to secure those permits? Someone has to actually go get them. You want to make sure that the contractor is responsible. If not the contractor, then the architect, but it must be pre-determined. The owner should never have to go suffer through the Kafkian void that is New York City’s Department of Buildings.
In part two, we will continue the discussion on these agreements. If you’re an Owner, a Contractor or Subcontractor, contact me here with questions or comments about AIA agreements.