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D4COST Software

  Making a Clean Break
Ending the Client-Architect Relationship

Arthur O'Leary, FAIA, MRIAI
 


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Thinking Ahead
At the time we enter into architectural service relationships, we seldom envision how we would conduct ourselves if the assignment should come to a premature end. We also do not think about how the client might act in the circumstances.

Most client relationships begin in an environment of cheerful optimism and confidence in the future. Both client and architect are hopeful, trusting, and enthusiastic. The last thing either would want to think about at this time would be how to end the relationship. Thus, the termination provisions of the typical architectural contract are seldom, if ever, negotiated to any great extent or even discussed.

The Agreement
Letter Agreements or No Agreement.
Architects who proceed with a brief letter agreement, or no written agreement at all, will have no behavioral guidelines for themselves or their clients. Often, severe disappointment in the temporary or permanent collapse of the project or the relationship will cause the parties to act in bizarre, unwarranted, or hasty manners.

In some cases, the winding up of the business part of the relationship falls into irresolvable disagreement and becomes a formidable legal matter to be settled by lawyers and, possibly, the court system.

The more efficient and economical arbitration process is usually not available to those without a written agreement, and most letter agreements do not contain an arbitration clause. Mediation or arbitration is only possible if both parties agree to it in writing, and this may not be possible when relations are strained.

Written Agreements. Even though suspension or termination happens infrequently, well thought-out architectural service agreements will always have appropriate provisions for the occasional need. The AIA standard form of owner-architect contract, B141- 1997, has a practical approach to the various types of suspension or termination. Most of us will never study, or even look at, these few paragraphs unless a termination or suspension is imminent.

Suspension or Termination by the Client 
For the Client’s Convenience and Without Cause.
The client may suspend or terminate the project or the architect’s services at any time for convenience and without cause, upon written notice. (B141-1997, clause 1.3.8.5)

Architect’s Substantial Nonperformance. The client may terminate the agreement at any time, upon written notice, if the architect fails substantially to perform any of the requirements of the agreement through no fault of the client. (1.3.8.4) Examples of an architect’s substantial nonperformance are not given in the agreement. Some that readily come to mind are missing important deadlines, failing to follow the program or other client instructions, failure to meet the client’s budget, or failure to keep the client informed of important matters.

Suspension or Termination by the Architect 
Client’s Failure to Pay.
The architect may terminate the contract or suspend the services, upon written notice, if the client fails to make payments in accordance with the agreement. Nonpayment of the architect’s fee is the only example of substantial nonperformance specifically mentioned in the agreement. (1.3.8.1)

Client’sSubstantial Nonperformance. The architect is also entitled to terminate the agreement if there is any other substantial nonperformance by the client. (1.3.8.4) Other examples that could be included are failure to provide program and site information when needed or failure to provide reviews, decisions, and approvals in a timely manner.

Client’s Suspension Over 90 Days. The agreement may be terminated by the architect, upon written notice, when the client has suspended the project or the architect’s services for more than 90 consecutive days. (1.3.8.3)

Architect’s Liability for Delay. The agreement provides that the architect has no liability to the client for any delay or damage to the client caused by the suspension of services. (1.3.8.1)

Payment to the Architect 
Before resuming services after over 30 consecutive days of suspension ordered by the client, or after an architect’s suspension of services on account of nonpayment, the client must pay all sums due prior to suspension and all expenses incurred in the interruption and resumption of services. The fees for remaining services and the time schedule must be equitably adjusted. (1.3.8.1 and 1.3.8.2)

When a termination is not the fault of the architect, the client must pay for all services performed before the termination, all reimbursable expenses then due, and all termination expenses. (1.3.8.6)

Personality Conflict 
Occasionally, an architect or client finds that they are temperamentally unsuited to continue dealing with each other for various personal or personality reasons. Some people seem or appear arrogant, impolite, irresponsible, pompous, condescending, or, in some way generally insufferable.

When this happens, B141 allows the client to opt out at any time by invocation of the privilege of termination for convenience or without cause. (1.3.8.5) 

However, this escape clause is not available to the architect, who must stick it out, regardless of personal aversions. The only way out is if the client and architect are mutually willing to call it quits. In this case they must agree on acceptable terms for termination of the agreement.

Written Notice 
All required notices must be given by the architect to the client, or by the client to the architect, in writing and must be given at least seven days in advance of the action that will be taken. (1.3.8.1, 1.3.8.3, 1.3.8.4, and 1.3.8.5) Any notices to be given should be carefully drawn.

The Client’s Continuing Use of the Documents 
The AIA agreement grants the client a nonexclusive license to reproduce the architect’s drawings, specifications, and other instruments of service solely for the purposes of constructing the building and maintaining it thereafter. This license is valid only if the client has paid for the architect’s services and has otherwise complied with the agreement.

This license is terminated when the agreement is terminated. The client is obligated, within seven days of the termination, to return all originals and copies of instruments of service to the architect.

However, if the architect is adjudged in default under the agreement, then the client has the right to hire other similarly qualified design professionals to reproduce and use the instruments of service to complete and maintain the building. (1.3.2.2)

What to Do 
In the event that you are considering a suspension or termination, or if you have been suspended or terminated by your client, read your agreement carefully to determine your rights and obligations. Considering that this is usually an important and costly move for all concerned, all requirements and procedures of the agreement should be carried out exactly as specified. It would be wise to confer with your lawyer before taking any irrevocable actions.


Key Words and Phrases

  
Substantial Nonperformance. A major default under the agreement. The failure of the client or the architect to perform some important or essential duty required in the agreement. Minor infractions do not qualify. There could be disagreement over the distinction.
   Suspension of the Project. The temporary stopping of the project by the client for any reason or by the architect for a reason specified in the agreement.
   Suspension of Services. The stopping of the architect’s work temporarily, whether initiated by the architect or ordered by the client.
   Termination Expenses. Expenses incurred by the architect that are directly attributable to termination, plus an amount for the architect’s anticipated profit on the value of the services not yet performed.
   Termination of the Agreement. Permanent stoppage of the agreement by the client for any reason.
   Termination of the Project. Permanent stoppage of the project by the client for any reason.

Note:

For additional information on suspension and termination of architectural agreements, see “A Guide to Successful Construction,” Revised Third Edition, by Arthur F. O’Leary (BNi Publications, Anaheim, California), Chapter 3, Architectural Services Agreements.



“A Guide to Successful Construction: Effective Contract Administration” by Arthur F. O’Leary, FAIA, MRIAI or “Construction Nightmare Jobs From Hell & How To Avoid Them” by Arthur F. O’Leary and James Acret are available from bookworkz.com or call DCD at 800-533-5680.


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