By David de Barros, Esq.
“Standard” contracts/documents for design and construction services published by the American Institute of Architects (“AIA”) play a vital role in the real estate development and construction industries. Earlier this year, the AIA issued its 2017 Edition of some of its core standard documents — below is a quick look at a few of the differences between the 2007 and 2017 versions of the standard A201 – General Conditions of the Contract for Construction.
Notice. The A201-2017 provides for a new § 1.6 concerning contractually-required notices and the delivery of such notices. The new § 1.6 expands and clarifies the former § 13.3 of A201-2007, allowing for notices to be sent via e-mail, except for notices of claims provided for under Article 15, which shall be sent by certified or registered mail, or by courier providing proof of delivery.
Digital Data Use & Transmission. Unlike the former § 1.6 of A201-2007, which provides that the parties would “endeavor” to establish protocols governing digital data transmission, the new § 1.7 of the A201-2017 establishes, as a default, the use of AIA Document E203–2013, Building Information Modeling and Digital Data Exhibit, to institute protocols for the development, use, transmission and exchange of digital data. In addition, the A201-2017 includes a new § 1.8, establishing that if the parties fail to agree upon protocols governing the use of and reliance on information in a building information model, a party relies on such building information model at its own risk.
Evidence of Owners’ Financial Capabilities. The A201-2017 includes a modified § 2.2, expanding and strengthening the Contractor’s ability to enforce its right to evidence that the Owner has made financial arrangements to fulfill its payment obligations. The Contractor is now entitled to an increase in Contract Time and Contract Sum, if work has commenced and is suspended due to lack of evidence of adequate financing [if it is prior to commencement of the work, the Contract Time shall be extended]. Notably, following the commencement of construction, the Contractor is only entitled to proof of adequate financing, if the Contractor identifies a “reasonable concern” regarding the Owner’s ability to pay or if there is a “change in the Work that materially changes the Contract Sum.” Additionally, a new § 2.2.4 addresses the Owner’s confidential information.
Notice: Site Conditions. The A201-2017 modifies § 3.7.4 to shorten the time period within which a notice of a differing site condition is required from 21 days to 14 days after first observance of the condition.
Minor Changes in the Work. The A201-2017 expands § 7.4 requiring changes be in writing and the Contractor to provide notice before commencing work if it believes any such minor changes do have a cost or time impact. If the Contractor performs work in an architect’s order for minor changes without objection, the Contractor waives any adjustment to the Contract Sum or extension to the Contract Time.
Indemnification Against Lien Claims. The A201-2017 modifies § 9.6.8 to include a Contractor requirement to indemnify against lien and nonpayment claims asserted by subcontractors/suppliers.
Insurance and Bonds. The most significant change in the A201-2017 relates to Article 11 – Insurance and Bonds. The AIA edited down the insurance and bonds article and addresses the details of the required insurance coverage and bonds in a new separate 7 page exhibit that is to be negotiated between the Owner and Contractor as part of the overall deal. [Parties are encouraged to review and consult with their risk manager and/or insurance consultant about the potential impact of the details in the insurance exhibit.]
Termination for Convenience. The A201-2017 modifies § 14.4.3 to include the payment of a termination fee, replacing the prior requirement for payment of reasonable overhead and profit on the Work not executed. To coordinate and employ this change, the AIA includes a provision in 2017 Edition of other standard documents allowing for a stated termination fee.
Initial Decision Maker. The A201-2017 modifies § 15.2.1 limiting the involvement of the Initial Decision Maker to disputes occurring before substantial completion.
The content is information only and does not constitute legal or professional advice. We encourage you to consult the author, David de Barros, Esq. (firstname.lastname@example.org), if you have any specific questions or concerns relating to any of the information covered here.