10 Tips on Drafting Better Contracts
The days of the handshake deal are far gone and it is imperative that the design professional be armed with a written agreement that clearly delineates the nature and extent of each party's roles, rights and responsibilities. Below are several important tips on drafting a well versed agreement:
- Be clear as to the scope of your services. The contract should clearly state the nature and extent of each service being performed by the design professional during both the design and construction phases of the project. Further, if the contract provides that the design professional will perform additional services over and above basic services, the agreement should clearly state that any such services will only be provided if requested and expressly agreed to in writing.
- Identify specific exclusions. Services that the parties agree will not be performed by the design professional should be specifically delineated in the contract. An example is that the design professional will not be responsible for the contractor's means, methods, techniques or sequencing of construction, or for site safety.
- If appropriate, indicate that there are no third party beneficiaries to the contract. If it is agreed between the parties that the services being performed by the design professional are to benefit someone who is not a party to the agreement, make certain the contract clearly identifies that party. If not, make sure the agreement provides that no relationship, contractual or otherwise, is being created between the architect and any third party.
- Include a copyright protection provision. Unless agreed otherwise, the contract should include language that provides that the design professional retains all copyright protection and ownership to the plans and drawings. It should also be stated that the design professional is granting the owner a nonexclusive license to the plans and drawings solely for construction and use with respect to the subject project.
- Be Cautious With Indemnification Language. Many owners request design professionals sign agreements which contain indemnification language which requires the design professional to defend indemnify and/or hold harmless the owner in the event of a claim. Be careful when agreeing to any contracts with such language, as such provisions often result in significant legal ramifications.
- Include Payment language. Include a provision that clearly states when and how the parties may terminate the contract.
- Add Termination Language. Include a provision that clearly states when and how the parties may terminate the contract.
- Include Limitation of Liability Language. In certain circumstances, the Courts of the State of New York have enforced limitation of liability clauses. Therefore, consider adding language limiting the amount of damages for which the design professional will be responsible.
- Consider Alternative Dispute Resolution. In anticipation of a dispute between the parties, consider including a provision setting forth a mechanism (i.e., arbitration or mediation) for resolving such a dispute. Such language can be helpful to stave off full blown litigation should be conflict between the parties arise.
- Get A Fully Signed And Dated Contract. It is difficult, and sometimes impossible, to enforce a contract that is not dated and signed by all parties.
While having an appropriate contract is no guarantee against a claim, the absence of one certainly impedes the professional's ability to extricate themselves from such claims. The paramount rule is to be cautious when entering into professional service agreements. The professional must be careful to review and understand all of the terms and conditions of the agreement, which set forth the rights and responsibilities of the parties, prior to executing the agreement. In this regard, the professional should strongly consider consulting with an attorney qualified to assist in drafting and agreement which with fully protect the design professional's interest.
By Steven Goldstein, Esq
Photography © Alexandr Denisenko
Hall and Company is an insurance brokerage firm that specializes in the placement of A/E professional liability insurance. We currently are the brokers for more than 3,600 architects, engineers, environmental consultants and land surveyors. Our clients are located throughout the United States. We are located in Poulsbo, Washington, a suburb west of Seattle located on the Kitsap Peninsula.
Steven Goldstein chairs the Design Professional Practice Group for Shaub, Ahmuty, Citrin & Spratt, LLP; Mr. Goldstein possesses extensive experience in representing design professionals in all phases of litigation. He is also extremely skilled in providing a full range of legal services involving sophisticated business and risk management counseling to insurance companies and individual clients to assist in analyzing and minimizing liability exposure to avoid litigation. Our website is http://www.hallandcompany.com.
All content on this site/blog is for informational purposes only, and does not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author.