In June 2010 RIBA published a new set of Standard Conditions of Appointment for use by consultants on construction projects. Whilst a portion of the risk (as before) is passed to the consultant, the standard form appointment remains consultant favoured and the changes proposed seek to protect the consultant even further. From an employer's perspective, most of the consultant-favoured changes should be resisted and (as is usual) standard amendments made. Some of the key changes are as follows:
No set off
No payments may be withheld by the client unless the amount has been agreed with the consultant or decided by any tribunal. This prevents the client withholding money if they are not happy with the work carried out by the architect. This is in addition to the express exclusion of set off at common law and equity which remains from the 2007 edition.
Either party is entitled to claim interest for late payment at a rate of 8% above base. The previous rate was 5%. The payee is also entitled to claim its reasonable costs incurred and duly mitigated in obtaining payment of amounts due under the agreement.
Cap on liability
The consultant's liability is automatically limited to the amount of professional indemnity insurance which it agrees to maintain under the appointment, provided that any relevant claim has been notified to its insurers. From a consultant's perspective, it is important to clarify and tighten the wording of the cap as in its current form it does not specifically refer to negligence and therefore claims of this nature may be excluded.
The new conditions provide the option for warranties, third party rights and/or a novation to be entered into by the architect. As no definition of beneficiary is included, the potential pool of warranty recipients may extend to all funders, purchasers and first tenants.
The consultant now has termination rights which are equal to those of the client eg the consultant can now terminate performance of the services by giving reasonable notice, stating the reason(s) for doing so and the services and obligations affected. The consultant's extensive termination rights do not affect the client's licence to copy and use, and allow other persons to copy and use, the drawings, documents etc produced by the consultant. If necessary, a replacement consultant could therefore pick up where the outgoing consultant finished. If the consultant terminates without good reason, the client is likely to suffer delays and incur additional costs. The client may seek to amend the terms so as to pass on responsibility for any such additional costs and delays to the consultant.