As anyone who is taking the time to read this blog probably knows, the American Institute of Architects (AIA) construction contract forms are omnipresent. Which means you also probably know that in April 2017 the AIA released an update to its A201 general conditions form, last updated in 2007.
While many of the changes were discussed, researched, written and lectured about last summer, including by me, I’ve recently started to field a lot of questions about the 2017 changes to the AIA documents, A201 in particular. This is no surprise, I suppose. After the 2007 AIA forms were released, it took a year or two before the updated forms were used more frequently.
In light of these recent questions, now seems like a good time to summarize a few of the differences between A201-2007 and A201-2017.
§1.1.8 Initial Decision Maker
A201-2017 adds a sentence shielding the Initial Decision Maker (IDM) from liability for “interpretations or decisions rendered in good faith.” While this new sentence requires the IDM to act in good faith, it nevertheless appears to be a broad liability waiver for someone who could be making key decisions relating to cost, time and scope.
§ 126.96.36.199 Savings Clause
A “savings” clause has been added to A201-2017 – meaning that if a court finds that part of the agreement violates the law or is otherwise unenforceable, the remainder of the contract is nevertheless enforceable. Further, if a section is deemed unenforceable, the court may revise the section to make it legal rather than throwing out the entire section.
Whenever “notice” is required by A201-2017, such notice is now required to be in writing.
§2.2 Evidence of Owner’s Financial Arrangements
This expanded section includes more comprehensive requirements as to the owner’s duty to provide information concerning its ability to pay. It also now allows a contractor to refuse to begin the work until such information is provided and, in certain circumstances, a right to stop work after work has commenced.
§3.3.1 Supervision and Construction Procedures
A201-2017 deletes the following language in the first sentence: “unless the Contract Documents give other specific instructions concerning these matters.” This is a significant change because it arguably creates greater responsibility for the contractor relating to construction means and methods than the prior version. In addition, if the contractor determines that the contractually specified means and methods are unsafe, this section now requires the contractor to come up with alternative means and methods. The 2007 form required the contractor to wait for instruction from the architect after raising a safety concern.
§3.10 Contractor’s Construction and Submittal Schedules
Contractors are now required to provide additional information in its schedule of work, such as interim milestone dates, apportionment of work by construction activity, and time required for completion of each portion of the work.
Communications between owner and contractor are now expressly allowed. The architect need only be copied on “communications that relate to or affect the Architect’s services or professional responsibilities.” Moreover, this section includes a relatively broad requirement that owner notify architect of any direct communications with contractor otherwise relating to the project.
§6.1 Owner’s right to Perform Construction and to Award Separate Contracts
The 2017 version now defines those contractors who have been retained under separate agreements as “Separate Contractors.”
§9.3 Application for Payment
Releases and waivers of liens from subcontractor(s) and suppliers are now required to be submitted with the contractor’s applications for payment.
§9.6.8 Subcontractor Lien Claims
This new provision requires the contractor to defend and indemnify owner from all loss, liability, damage or expense, including attorney’s fees arising out of any lien claim or other claim for payment by subcontractor or supplier. The caveat to this requirement is that owner has fulfilled its payment obligations pursuant to the contract documents.
Article 11 – Insurance
The changes in Article 11 are probably the most significant. The 2017 version of Article 11 deletes many of the sections setting forth specific insurance requirements and moves them to Exhibit A. Exhibit A provides a check-the-box style menu of insurance options, durations, and limits which specifies the types of insurance required by the owner and contractor. There are far too many changes in this Exhibit to discuss in this article, but they will be the subject of my next blog. However, a few of the notable changes are: setting forth specific procedures and processes for cancellation of insurance; contractor’s insurance shall be maintained through the correction of work period rather than final payment; more specific language relating to additional insured coverage for owner and architect; requiring contractor to purchase professional liability, pollution liability and/or maritime liability insurance in certain circumstances; and expressly prohibiting certain practices or policy language in CGL policies.
AUTHOR’S NOTE: This is a good time remind our readers to review their respective insurance programs with their broker or lawyer for compliance with the terms of the new A201-2017 Exhibit A.
§14.4.3 Termination for Convenience
Upon termination for convenience, the contractor is no longer entitled to reasonable overhead and profit on the work not executed. Instead, the contractor is entitled to payment only for the work executed, costs incurred by reason of termination and a “termination fee, if any, set forth in the Agreement.” It appears that a negotiated termination fee, if set forth in the agreement, will take the place of recovery for lost overhead and profit.
As noted at the beginning of this post, these are merely a few of the differences between A201-2007 and A201-2017. Reading and understanding the entire agreement is best practice. If there are things you want to better understand, edit or reconsider, consult with your favorite project partner, your attorney!