Why Would I Do That? Where The AIA A201-2017 Grants Rights To Third Parties That Don’t Benefit The Owner Or Contractor.

Contractors and owners need to be aware of how A201 introduces the interests of third parties, principally the project architect – into their two-party agreement. Contractors and owners may want to go further and consider deleting or modifying these provisions to streamline their contract documents and to avoid granting unintended rights and authority to the architect or subcontractors without affecting the rights and obligations as between the owner and contractor, the only actual parties to A201. Specifically, contractors and owners should carefully consider the standard language contained in the A201 provisions discussed in this article to determine whether they want to assume obligations or grant rights to the architect or subcontractors, though the architect and subcontractors are third-parties to the owner and contractor’s bilateral negotiations and to A201, and whether such provisions warrant deletion. 

The Architect’s Authority Over the Design Documents

Section 1.1.2 enumerates what documents will govern a project and disclaims that the contract documents do not form a contractual relationship between parties other than the owner and contractor, such as between the contractor and the architect or its consultants. The final sentence of Section 1.1.2, however, broadly entitles the architect to enforce the performance of any “obligations under the Contract intended to facilitate performance of the Architect’s duties,” despite the architect not having a direct contractual relationship with the contractor. The opening sentence of Section 1.5.1 explains that the architect and its consultants own drawings, specifications, and other similar documents related to a project and that they retain copyright and all legal rights to such documents. The remainder of Section 1.5.1 contains the disclaimer that the contractor, its subcontractors, and related parties do not own such documents.

Extending Contractor Warranties and Hold Harmless Provisions to the Architect

Section 3.5.1 contains several standard warranties by the contractor, including that equipment and materials provided by the contractor will be of good quality. The first sentence of Section 3.5.1 states that the contractor makes such warranties not only to the owner, but also to the architect.  Similarly, Section 3.12.6 contains assurances by the contractor regarding the accuracy of shop drawings and other written submittals. The first sentence of Section 3.5.1 again specifies that the contractor makes these assurances to both the owner and the architect. Section 3.17 requires that the contractor pay all royalty and license fees and hold both the owner and architect harmless for any failure to do so. Parties may simply delete references to the architect from these provisions if they wish to eliminate the inclusion of obligations to third parties.

Architect Visits to Ensure Performance While Disclaiming Architect’s Liability for Contractor’s Non-Performance

Section 4.2.2 requires that the architect visit the project site at certain intervals to remain familiar with the progress of the project and to ensure that the work performed meets contract specifications. 4.2.2 also disclaims, however, that the architect need not make continuous on-site inspections to check the quality or quantity of work. Section 4.2.3 goes on to outline requirements that the architect keep the owner informed about the progress and quality of work on the project but contains the caveat that the architect “will not be responsible for the Contractor’s failure to perform the Work in accordance with the requirements of the Contract Documents.”

Requiring the Architect to be Included in Communications Between Owner and Contractor regarding the Architect’s Services

Section 4.2.4 requires that the owner and contractor “include the Architect in all communications that relate to or affect the Architect’s services…” and requires that the owner and contractor promptly notify the architect of the substance of all other communications related to the project. Parties should consider whether they wish to include such extensive protections for the architect in their version of Document A201-2017.

Also Bringing Subcontractors Into A201

Section 5.3 requires that the contractor cause all subcontractors to agree to the terms of the contract documents. The section goes on to specify that subcontracts must protect the rights of both the owner and the architect and requires that subcontractors be given all rights against the contractor that the contractor has against the owner. Finally, this section requires that the contractor allow subcontractors to review the contract documents prior to the execution of any subcontract, and further allows prospective subcontractors to require the contractor to identify terms and conditions of the subcontract that vary from the terms of the prime contract. Subcontractors in turn must allow sub-subcontractors to review such documents.

Section 5.4.1 deals with the assignment of subcontracts between the contractor and the owner and requires that the owner assume all obligations under a subcontract on assignment. Section 5.4.2 also imposes on the owner the obligation after such assignment to equitably adjust a subcontractor’s compensation if work is suspended for more than 30 days. Finally, Section 5.4.3 requires, in the event an owner assigns a subcontract to another entity, that the owner remains responsible for the successor’s obligations under the subcontract. As a result, Section 5.3 and following sections build in extensive protections for potential subcontractors who are not involved in negotiation of the form A201-2017.

Other Third-Party Rights Granted Under A201

Other provisions of A201 grant the architect, subcontractors, or other parties rights when the owner utilizes its own resources on a project, the right to access project documents, and rights to indemnification.

• Section 6.1.4 provides that, in the event an owner performs construction on a project using its own forces or other contractors, the owner and any other contractors must retain rights and obligations of the prime contractor under the contract.
• Section 9.6.3 requires that the architect provide subcontractors, if practicable, with information relevant to percentages of work completed or amounts applied for by the contractor regarding work performed by that subcontractor, and any related action taken by the architect or owner.
• Section 10.3.3 requires that the owner indemnify the contractor, subcontractors, architect, and architect’s consultants for any damages resulting from performing work in an area affected by an unforeseen hazardous material if the owner has failed to make the area safe after being informed of the danger by the contractor.

Important Insurance Rights to the Architect

The standard language of A201 grants the architect significant rights under insurance policies applicable to the contract. Section 11.1.1 requires that the contractor include the architect and the architect’s consultants as additional insureds in the contractor’s general liability insurance policy. The subrogation clause in Section 11.3.1 also requires that the owner and contractor waive all rights against the architect and its consultants for losses that are covered by property insurance applicable to the project.

Closing Thoughts

A201-2017 provides a useful and popular standardized document for project owners and contractors to outline the general conditions of a construction project. A201-2017 is highly customizable, and contracting parties should carefully examine its standard provisions to ensure that their terms are appropriate for any given project. Contractors and owners should specifically consider whether they wish to include the provisions discussed above, which exclusively benefit entities that are not a party to the contract.