The RIBA Agreements 2010: are we there yet?

Over the past two years, Stacy Sinclair has followed the heated battle between the RIBA and the Association of Consultant Architects (‘ACA’) over the Architect’s standard form of appointment. In 2007, the RIBA launched a new suite of agreements which received a lukewarm welcome from the industry. The ACA refused to give its support and went on to publish its own standard form in 2008, the ACA SFA/08. Finally, in June 2010, the RIBA published a new suite of agreements, this time with the endorsement of the ACA. This year, Stacy looks at the new RIBA Agreements 2010, and asks, is this it? Are we there yet?

An Overview

The recently released RIBA Agreements 2010 is a customised suite of contracts, tailored to the appointment of an Architect. The suite attempts to maintain a fair and balanced position between both the Architect and the client and is recognised as a standard industry document. Like the 2007 Agreements, the 2010 suite consists of appointments for ‘the Architect’ and ‘the Consultant’ and is offered in ‘Standard’, ‘Concise’ and ‘Domestic’ forms. In addition, a sub-consultant agreement is also available. The RIBA Agreements 2010 are now shorter and more user-friendly appointments, whilst still maintaining the flexibility and clarity the 2007 Agreements sought to provide. Indeed, the RIBA has taken on the suggestion to consolidate the Project Data, Services and the Fees and Expenses schedules into one document, another improvement over the previous edition.

A table highlighting the significant changes from the RIBA Agreements 2007 is helpfully provided at the front of each appointment. Key amendments include:

• Termination: Unlike the 2007 Agreements, the Architect now has the right to terminate the contract in the same circumstances as the client. Either the client or the Architect may, by giving reasonable notice to the other, terminate performance of the services. (See clause 8.2). This does provide further rights and protection for the Architect; however, as commercial clients are likely to object to this, Architects may find themselves having to negotiate to keep this clause in the appointment.
   
• Interest for late payment: In the RIBA Agreements 2007, only the Architect was entitled to claim 5% above the Bank of England’s base rate. Now, either party may claim 8% above the Bank of England’s base rate. In addition, the 2010 agreements enable the payee to recover costs reasonably incurred in obtaining payment of any sums due under the agreement. (See clause 5.19). Again, Architects should be forewarned that many commercial clients may be unwilling to pay interest at this level and will seek to amend the standard form. At the moment, the Bank of England’s base rate remains low; however, should there be an upwards adjustment in the future, 8% above the base rate could be particularly punitive and therefore result in further negotiations over this clause.
   
• Consumer contracts: Clause 10 takes into account the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 (SI 2008/1816). Where the project relates to the client’s home and the client is a consumer acting outside of his or her business, the consumer client has the right to cancel the agreement for any reason within 7 days of when the agreement was made.

Further protection for the Architect

Some of the new amendments do provide additional protection for the Architect:

• Limit of liability: Clause 7.2.1 introduces the provision that the consultant’s liability for loss or damage will not exceed the amount of its professional indemnity cover, provided its insurers have been notified. In the RIBA Agreements 2007, the parties were free to choose the cap on the Architect’s liability.
   
• Warranties: Clause 3.10 now provides that the Architect/consultant does NOT warrant that:

1. planning permission or other approvals from third parties will be granted at all, or within a given timeframe; and
2. compliance with the Construction Cost and/or Timetable, as it may need to be reviewed for such matters as approved variations, delays caused by others, etc.

• Limited right to withhold payment: Clause 5.16 now expressly limits the client’s right to withhold payment ‘unless the amount has been agreed with the Architect or decided by any tribunal’. As with the RIBA Agreements 2010, the client’s common law or equitable rights of set-off are still excluded.
   
• Confidentiality: The confidentiality obligations are no longer absolute. Under Clause 2.9 they are now subject to reasonable skill, care and diligence.
   
• Fee adjustment: Clause 5.8 now provides further protection to the Architect’s Basic Fee. In particular, Clause 5.8.2 states that the Architect’s Basic Fee shall not be adjusted simply because of a deflation in the Construction Cost due to market conditions. This could prove beneficial for Architects, particularly if the UK faces a double-dip recession as predicted by some.

Not necessarily for everyone…

As one can see, though the suite purports to allocate risk in a fair and balanced manner, the amendments discussed above do tend to favour the Architect and reinforce the perception that RIBA agreements are consultant-friendly. Accordingly, this may deter developer or commercial clients from choosing the RIBA Agreements 2010, in favour of a bespoke appointment, an alternative standard form or a highly amended RIBA agreement.

For example, with the increased use of the NEC3, Architects and consultants may be requested to use the NEC3 Professional Services Contract (‘NEC3 PSC’). The NEC3 PSC has been drafted so that it sits squarely within the NEC3 suite of contracts. As such, it aims to promote the ethos of collaborative working and it emphasises project and risk management. Its terminology and structure closely resemble the NEC3 contracts with its straightforward language and use of the Main and Secondary Option clauses. As a result, this appointment reads very much like a typical building contract and requires its users to be proactive in its contractual procedures. It is clearly a different ball game from the RIBA Agreements 2010 and consultants should ensure they understand how it operates.

If the bargaining position of the client is strong, as is likely to be case in today’s financial market, there may be little the Architect or consultant can do to influence the choice of their appointment. Not all sophisticated clients will accept the RIBA form of appointment and accordingly consultants should of course seek advice when amendments to standard forms are imposed, be it the RIBA Agreements 2010 or any other standard form.

Conclusion: are we there yet?

The recently released RIBA Agreements 2010 are proving more successful than its 2007 predecessor. The strongest evidence of this is the ACA’s endorsement. Architects can now rest assured that more of their interests are protected with the new standard form and furthermore, the contracts are now easier to assemble.

So are we there yet? The new suite has certainly alleviated many of the Architects’ concerns and arguably is likely to achieve a status of general acceptance in the industry, similar to that of the older RIBA SFA/99. However, that unfortunately also means that, like the SFA/99, large sophisticated and commercial clients will continue to either amend the 2010 version or opt for bespoke appointments. Either way, the RIBA Agreements 2010 are off to a good start.

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