Architects operate in an increasingly complex contractual environment. This applies to the varied contracts using for procurement of projects to the contracts between architect and client. Increasingly procurement contracts and client/architects contracts are becoming one, with novation to the contractor becoming increasingly prevalent for government and commercial projects.

The SA Chapter has a number of initiative in progress in response to this changing landscape. These include:

• Ongoing discussions with DPTI regarding their proposed amendments to the standard AS4122 contract. This joint initiative with the ACA and Consult Australia has resulted in DPTI withdrawing the proposed amendments pending further review.  In the interim the standard AS4122 contract is being utilized.
• Engagement in development of the Office of the Industry Advocate’s Industry Participation Policy, which has highlighted the positive input that architects can make provided they are engaged under a contract that enables them to exercise their full professional capabilities.
• Forums to enable collective review of the STEM projects and provide support for the practices involved. The most recent, which was delivered in conjunction with the ACA, focused on the contracts that the architects had signed up to and their options, obligations and risks moving forward.

All of these activities highlight the need for architects to be mindful of what they sign. Checking the details of the contract after it is executed is not good practice. Nor is signing anything provided by government on the grounds that, on previous experience, they won’t enforce the penalty clauses. For a start government contracts may result in the architect being novated to a contractor, as is occurring on many of the STEM projects. Secondly, government is increasingly seeking to modify contracts to make consultants more accountable for costs arising from errors and omissions. This includes resulting variation costs as well as costs for re-documentation.

Fear of losing a project on the grounds that you won’t sign a client prepared contract should not outweigh the very real risks of signing a contract that will not be supported by your insurance policy. Insurance brokers offering architectural professional indemnity policies will generally review a contract and highlight any clauses that they will not cover without a very significant increase in premiums, rendering the contract effectively uninsurable. Architects should make use of this service every time they receive a non-standard contract. If your insurer does not offer this service you should consider changing to one that does.

This review service will often highlight issues including clauses relating to:

• warranting of services by the architect
• Amendment to clauses relating to proportionate liability
• Amendment to clauses relating to limitation of liability
• Certification of construction by the architect

If these or other issues are identified then architects should draw this to the attention of the client, or risk being in contravention of Clause 59 (1) of the Architectural Practice Act 2009. It should be noted that these issues will be common to all industry standard PI insurance policies and therefore apply to all practices tendering for the project. Entering into a contract with such clauses will void the practice’s insurance policy, which the client will have invariably stated as a condition of entering into a contract. It is therefore in the client’s interest to amend the contract as proposed by the insurance review.

Standard contracts modified after 12 November 2016 may also be subject to the Unfair Contracts Act https://www.accc.gov.au/business/business-rights-protections/unfair-contract-terms .Examples of terms that may be unfair, include:

• terms that enable one party (but not another) to avoid or limit their obligations under the contract
• terms that enable one party (but not another) to terminate the contract
• terms that penalise one party (but not another) for breaching or terminating the contract
• terms that enable one party (but not another) to vary the terms of the contract.

Contracts can be reviewed by the ACCC or the SA Office of Consumer and Business Services http://www.cbs.sa.gov.au/ to determine if they are unfair under the Act.

In summary, the profession needs to follow best practice in relation to all contractual matters including client/architect agreements. If enough architects refuse to sign unfair and unnecessarily onerous non-standard contracts then clients will come to realise that they are not worth the legal fees they have paid to have them prepared. So, before you sign, consider whether it is worth entering into a contract that risks your business and your registration.

SA Chapter Practice Committee

The Institute’s National Practice Committee has been reinstated. This committee, in conjunction with the Acumen Content Review Panel, are charged with identifying and responding to issues relevant to current practice and preparing advisory notes to support the profession.

Michael Hegarty was appointed as the SA representative to the Acumen Content Review Panel earlier this year. To support him in this important role we are reforming the SA Practice Committee. The committee will have six standing meeting per year and will identify issues affecting SA practice, develop and review Acumen content and prepare responses to practice issues to government and other stakeholders. If you are interested in being involved in this group or would like additional information please contact Nicolette Di Lernia – SA Executive Director.