Earlier-than-expected changes to ConsensusDOCS, the three-and-a-half-year-old library of model contracts for building design and construction, have been welcomed by lawyers who say the update not only enhances the original documents but demonstrates a development process responsive to industry changes. ConsensusDOCS, a coalition of 31 industry groups and a rival of the American Institute of Architects and other standard-agreement developers, says more improvements are coming soon.
ConsensusDOCS released the update on Jan. 19, at least 18 months ahead of the originally envisioned five-year revision cycle. One rationale is that “the economics of the construction industry today looks nothing like it did [in 2007],” says Brian Perlberg, executive director and senior counsel of the Arlington, Va.-based ConsensusDOCS. All refinements can be viewed at www.ConsensusDOCS.org.
More changes, including forms for an owner-geotechnical engineer and an owner-green building facilitator, are coming in the next two years. ConsensusDOCS currently has 4,200 paying users.
Under the new forms, green building design is now a mandatory basic service if those project goals are included in the owner’s program. But additional services—for instance, the role of a green building facilitator—are separate. If they are included in the owner’s program, use of building information models and other electronic documents have become a basic service requirement.
One refinement in the short-form subcontractor agreement requires the surety to be registered in the state of the job. “That gives some assurance the surety is regulated or has its assets deposited in an insured account,” says David Mendes, senior director of communications for coalition member American Subcontractors Association Inc., Alexandria, Va.
Another refinement gives the owner the right to audit the constructor’s books. Still another requires automatic sharing of the owner’s financial information with the subcontractor. “With the hard economic times, this clause should benefit the subcontractor,” says Sue Yoakum, a construction lawyer with Donovan Hatem LLP, Boston.
A standard agreement between the architect and its design consultant is new. The term “constructor” replaces “contractor” and “design professional” replaces “architect/engineer” throughout the forms. ConsensusDOCS 300 has been renamed the Standard Tri-Party Agreement for Integrated Project Delivery.
A change gives the judge/jury/arbitrator the ability to award lawyer’s fees to the prevailing party in a dispute. Previously, if the parties to one of the contracts found themselves in a dispute, each party would be responsible for its fees, says Matt Gillies, a member of construction lawyer Stites & Harbison PLLC, Louisville, Ky.
Owners should be “happy to see” a modification concerning claims for improper termination for cause, adds Gillies. Under the new forms, if the owner terminates a contract believing the constructor is in default but it turns out the constructor was not, then the termination turns into a “termination for convenience,” which allows the constructor to recover under that provision of the contract. It also protects the owner against claims for damages for improper termination.
Gillies lauds the inclusion of a “standard of care” definition in the owner-design professional agreement, which he says is now similar to the clause in the 2007 agreement published by the American Institute of Architects. “Design professionals should be fine with the standard as written” but should review the clause in case the owner modifies it, he says.
The owner-design professional form has a new right-to-cure provision, which is similar to one in the owner-constructor agreement but is unique for a design-professional contract, Gillies adds.
The prime contracts include a “more clearly called out and placed” definition of existing contract documents, which Yoakum calls a positive change. Another addition is that the constructor “shall comply with all laws at its own costs.” The constructor’s review of contract documents, including design documents, has been given a clearer standard of review by eliminating reference to “as being necessary to produce the indicated results.”
Further, the constructor’s submittal requests will be sent to the design professional in addition to the owner, which is another good change, says Yoakum.
|“Constructor” replaces “contractor” and “design professional” replaces “architect.”|
|Objective “standard of care” added.|
|Green building design services are mandatory, but green building facilitator services are extra.|
|Greater flexibility to provide documents in electronic format.|
|Contract documents are better defined.|
|Owner can audit constructor’s books.|
|Erroneous constructor termination for cause changes to a “termination for convenience.”|
|Subcontractor can get financial information about owner.|