Engagement Terms: Sign Before Design.
Is it enough to incorporate engagement terms by reference in a covering letter? Or to send the terms and start on the design in the expectation that they will be agreed?
The answer is yes and no. But when it comes to the crunch, no.
Alas, many is the time that the designer has dutifully sent the client the terms of engagement and started on the design, only to find out months or years later that the terms were never actually signed and returned.
NZACS has had many claims where “everyone understood the terms of engagement” until it came to the point where there was some mileage for one of the parties (usually the client) to question what was actually agreed.
As for lots of building and construction issues, the devil is in the details!
If you write to the client and say that your terms of engagement are the standard NZIA terms, and they reply (similarly vaguely) “good, go ahead”, then you might succeed in establishing that you were proceeding on their instructions, and the times you spent are billable. If the client pays your first invoice, you would be on firmer ground yet. But when something goes wrong, your client (now aided by their astute lawyer) will – in the absence of signed agreed terms – find something to cast doubt on what the ACTUAL terms of engagement were. Even if you included those terms for them to read, they may not do so, and later claim that the terms you are relying upon are onerous and thus unenforceable.
Unless the client has signed and returned the terms of the service contract, there will be doubts about the rights, obligations, and scope of the contract. Ideally, you should then countersign and return the contract to them by way of confirmation.
If the client does not respond as or when expected, you may have to make a “commercial decision” whether to move on to the job or wait. Clearly if you proceed, you will be at risk. At the very least you should advise in writing that the terms as proposed are understood to have been agreed by default unless the client promptly objects; and/or are taken to have been agreed by payment of a fee invoice. Follow up with an invoice as soon as you reasonably can! If it comes to a dispute, you will need some means by which you can verify that the client received, and had the opportunity to respond to such communications.
There are some provisions in the AAS which are not intuitive, and therefore would be open to debate if the client had not specifically agreed to them:
Copyright: In the absence of the AAS, clients would assert that “they have paid for the plans”, and this gives rise to two recurring claims. Firstly that the client has an absolute right to all the graphic written and digital documentation created by the architect; secondly that the architect does not have the right to re-use that documentation elsewhere.
Liability: AAS does its best to ring-fence and define liability exposure. The provisions are the result of experience and legal understandings usually well beyond that of individual architects or clients (and many lawyers!).
Scope: Defining and describing the scope of the contract is a fundamental requirement. You and your client must have a common understanding of the intent of the design, observation, and contract administration tasks, or at least an agreement on how to deal with the absence of such descriptions.
Construction Contracts Act: An uninformed client may be unaware of the perils of ignoring a properly served CCA Payment Claim.
Registered Architects face an additional hurdle in the light of the January 2018 changes to the NZRAB ethics. These appear to ignore the reality that common business practice and marketing may require significant work ahead of actually securing a commission. Or that work must necessarily proceed despite a tardy response from the client. Or that work may proceed in parallel with negotiations around the terms of appointment, especially if the scope of work or the “client” changes during the project. Speculative work is done with the knowledge and acceptance of the commercial risks, but the new provisions add the prospect of an ethical risk which might be exploited by an energised complainant.
Maybe we have to be optimists: but too often the enthusiasm generated by a new job can cloud rational thinking. Perhaps engineers are less optimistic and more rational: they seem to grasp the importance of getting signed up before they act. We should too!!!