Contract Administrator

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What is a Contract?

A contract is an agreement which provides rights and obligations between two or more parties. It is a legally binding agreement that can be enforced by the Law.

A contract can be agreed in several ways, by conduct, orally or via an exchange of letters. However, to control the risk of potential disputes regarding the details of what the agreement includes, it is recommended to have a formal written agreement signed by both parties.

For a contract to become legally binding and valid, it must include the following significant requirements:

1) The parties must have an intention to create legal connections.

2) Should consist of two or more parties.

3) There must be an agreement.

4) The parties to the agreement must have provided valuable consideration.

ARB Code of Conduct Standard 4.4 states ‘you are expected to ensure that before you undertake any professional work, you have entered into a written agreement with the client which adequately covers:

  • Contracting parties

  • Scope of work

  • Fee or method of calculating it

  • Who will be responsible for what

  • Any constraints or limitations on the responsibilities of the parties

  • You have a complaints-handling procedure available on request

  • Provisions for suspension or termination of the agreement, including any legal rights of cancellation

  • A statement that you have adequate and appropriate insurance cover as specified by ARB

  • The existence of any alternative Dispute Resolution schemes that the contract is subject to and how they might be accessed

  • That you are registered with the ARB and that you are subject to the code of conduct.

What is a Form of Appointment?

A form of appointment is the means by which a consultant is appointed to a project. It is important the terms of the appointment are set out in writing as soon as is practically possible, defining the scope of services that are likely to be required and the fee that will be charged for those services.

When considering an offer of appointment, an architect must:

  • Be satisfied that the client has the authority and resources to commission the Work

  • Appreciate the background to the proposal and understand its scope

  • Be aware of any other consultants who have been or are likely to be associated with the project

  • Be satisfied that he has the experience and competence to undertake the work

  • Be satisfied that the office has the necessary finance, staff, and other resources

  • Be satisfied that the proposal will not conflict with any relevant codes of professional conduct, other commissions and commitments in the office and the policy of the practice

The architect must consider his position in relation to any other architect who may have been involved in the same scheme:

  • An employer can offer the commission to whomever he wishes to obtain alternative schemes

  • However, the architect must ensure that he acts fairly in his dealings with other architects

  • An architect who is approached by a potential client in connection with a project with which another architect has already been concerned has a duty to inform the other architect of his involvement

Standard Form of Appointment vs Bespoke Appointment

The authority of the architect is strictly limited to the terms of his appointment. The form of services can be varied with changing circumstances during the work, but it is essential that these changes are formally confirmed in amendments to the form of agreement. 

 

The architect's contract of engagement is usually personal to him: he cannot delegate his duties completely, but he is under no obligation to carry out all of the work personally. The appointments may be made by either an informal exchange of letters (frequent, but not recommended) or an exchange of a formal memorandum or agreement, in each case supported by appropriate supplementary material such as conditions of engagement.

 

Various institutions such as JCT and RIBA publish standard forms of agreement and their use is strongly recommended.

Standard form contracts are very often cheaper than bespoke alternatives, familiar to the parties involved (reducing tendering, negotiation and administration costs), and tend to contain fewer unforeseen anomalies.

Benefits of using a standard form include:

Bespoke contracts are specially drafted to suit the specific requirements of a particular project. On some projects, in particular, the more complex ones, creating a bespoke contract may be seen as the most efficient means of agreeing with terms. Bespoke contracts are also commonly used for very simple supply agreements, where the standard forms may be considered unnecessarily complex and inflexible. 

Where a standard form is not used, it is suggested that all important elements should be clearly identified and agreed particularly in any exchange of letters.

What is a Letter of Intent?

 

A letter of intent is commonly used to appoint consultants or contractors in cases when a client wants the project to start work quickly, while a full contract is being prepared.

 

It is a document expressing an intention to enter into a contract at a future date but creates no contractual relationship until that future contract has been entered into. A letter of intent is not an 'agreement to agree'.

 

It is important to bear in mind that 'letter of intent' is a term of commercial convenience and not a term having a substantive legal meaning. The letter of intent should never be seen as an alternative to a full contract and should place a limit on expenditure and the client’s liability prior to the contract being put in place.

 

For a letter of intent to be binding, there must be the three essential elements of a contract; agreement, intention and consideration.

 

A comprehensive letter of intent should address at least a few of the following:

  • Acceptance of the party’s offer and definition of the project.

  • Scope of services

  • The agreed contract sum.

  • Insurance provisions and indemnification.

  • Disputes resolution procedures.

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