Changes to AIA Documents

By Joseph P. Dirik

There are many changes to the AIA documents that may affect contracts and rights.

Although I always recommend that an attorney review the terms of a contract for any sizeable or risky project, contractors and owners regularly use form contracts without an attorney’s input. Popular form contracts include A101 Standard Form of Agreement Between Owner and Contractor and A401 Standard Form of Agreement Between Contractor and Subcontractor, both issued by the American Institute of Architects (AIA). Many AIA contracts incorporate by reference AIA document A201, General Conditions for the Construction Contract.

Dirik is a member of the litigation and construction law practice groups at the Dallas office of Fulbright & Jaworski LLP. Contact him at jdirik@fulbright.com.

In November 2007, AIA updated the A201-1997 document as it generally does every ten years. The A201 update contains many substantial changes. Contractors should be interested to know that for the first time in over 50 years, the Associated General Contractors of America (AGC) declined to endorse the new General Conditions version. AGC apparently made its decision, at least in part, based on a perceived shift of risks in A201 to contractors and other parties outside the design profession. A201 is particularly important because many times contractors sign an AIA contract without attaching, or even reviewing, a copy of A201. Let’s take a look at just a few of the changes between the 1997 and 2007 versions of A201.

Claims and disputes Per section 4.4 of the 1997 version, the Architect rendered initial decisions on claims. Sections 1.1.8 and 15.2 of the 2007 version give the parties the option to replace the Architect with a non-party, neutral, “Initial Decision Maker.”  If the parties do not identify an Initial Decision Maker, the Architect becomes the default choice to serve in this role. Contracting parties should take advantage of the opportunity to select a qualified neutral party when negotiating their contract. A well qualified neutral should have legal training and construction industry knowledge. Such a person can help the project resolve disputes early in the process. Parties can challenge the generally non-binding decision, but must do so as outlined in A201.

Authority Section 3.1 of the 2007 version adds a requirement for the Contractor to designate in writing a representative with express authority to bind the contractor in all matters. This requirement raises a question for another day is the named representative the only person who can bind the Contractor? A smart contractor will be sure to identify and designate the required representative as the only person with authority to bind the contractor.

Owner or Architect directions Section 3.3.1 of the 2007 version places a new burden on the Contractor. In the 1997 version, the Owner was responsible for loss or damage due to Owner or Architect imposed means or methods. The 2007 version limits Owner’s responsibility for such loss or damages “solely from those Owner-required means, methods, techniques or procedures.”  Apparently the Contractor must prove no other cause is responsible for the loss other than the Owner’s or Architect’s directions, in order to recover.

Compliance with applicable laws The new 2007 section 3.7.3 arguably eliminates an implied safe harbor if the Contractor performs work “knowing” it to be contrary to applicable laws. The former section 3.7.3 required the Contractor to notify the Architect and Owner of any variances it “observes.” Knowledge can include what you actually know and what you should know. Contractors and their attorneys should carefully examine this potentially significant burden on future contracts using A201-2007.

Differing site conditions Many contractors will agree that differing site conditions constitute one of the greatest risks a contractor can face. Section 3.7.4 in the 2007 version places the burden of reporting concealed or unknown conditions solely on the Contractor. The burden to report under the 1997 version applied to any “observing party.” I don’t understand the reason behind this change.

Submittal Schedule The new section 3.10.2 adds a requirement for the Contractor to prepare, maintain submit for the Architect’s approval a submittal schedule. If the Contractor fails to do so, it is not entitled to any increase in time or money based on the time required for submittal reviews. This places additional burdens on a contractor at the perhaps the most inopportune time the beginning of the job when a lot of things are going on.

Arbitration In the 2007 version of A101, arbitration of disputes is not automatically binding. In section 6.2, the parties may select their preferred binding dispute resolution forum or process.