Don—€™t forget your life preserver!

July 2012 » Columns » COMMENT
Daniel A. Cuoco, P.E., F.ASCE

Michael Baker—€™s legal column always contains interesting questions posed by our readers. As the former president and CEO of Thornton Tomasetti, Inc., I dealt with these issues on a daily basis and I cannot overemphasize the importance of adequately reviewing your contractual agreements.

The third question in this month—€™s column, asking whether payment provisions in the architect—€™s prime agreement with the owner are applicable to the structural engineer—€™s agreement with the architect, is of particular interest. In the situation cited, the structural engineer signed a contract that incorporated the architect—€™s prime agreement by reference, but the structural engineer never received a copy of the prime agreement. Unfortunately, it is not uncommon for architects to expect the structural engineer to sign an agreement without sending a copy of the prime agreement. Indeed, some structural engineers don—€™t even ask to see it!

Many of the contracts we sign with an architect incorporate the provisions of the architect—€™s prime agreement with the owner. The general intent is to achieve consistent terms and conditions between the various members of the design team, so it is understandable and reasonable for the architect to pass on these provisions to the consultants. In such cases, it is imperative to obtain a copy of the prime agreement before signing your agreement with the architect. Although many architects are savvy with regard to contract provisions, some others will sign just about anything. In the latter cases, payment provisions might be the least of your problems, since the prime agreement could contain various onerous provisions that are not covered by your professional liability insurance.

I recall a project on which the architect—€™s prime agreement with the owner required the —€œhighest standard of care—€ and required a broad indemnification of the owner by the architect —€“ even if not due to the architect—€™s negligence. As many of you know, these provisions are uninsurable and could expose a firm to significant risk. When we refused to sign our agreement with the architect because it incorporated all of the provisions of the prime agreement by reference, the architect said that he didn—€™t feel there was a problem with the contract terms and that he had already signed the prime agreement. He further stated that he could not understand our hesitation since all of the other consultants had signed their respective agreements. Sound familiar?

Since one of the consultants on the project was a prominent MEP firm, we suspected that they were having the same issues and hadn—€™t yet signed their contract. So we called them and spoke with the partner in charge of the office. To our dismay, not only did he confirm that he had signed the agreement, but when we asked if he was aware that it called for providing the highest standard of care, his response was, —€œDon—€™t we always do that?—€ At that point, we decided that it would be pointless to call any of the other consultants, so we again advised the architect that we could not sign our agreement with him. The architect complained that we were now attempting to —€œleave the boat,—€ but we reminded him that we had not gotten into the boat in the first place.

We expected the architect to tell us that he would now simply retain another structural engineer who would sign the contract, and we were willing to accept that. In this case, however, the architect felt that it was important to keep us on the team, so he agreed to exclude all of the uninsurable provisions of the prime agreement from our agreement. He also asked that we not disclose the modified terms of our agreement to any of the other consultants on the project. So we finally got on the boat, hoping that no one else would notice that we were the only ones wearing a life preserver!

Daniel A. Cuoco, P.E., F.ASCE,
dcuoco@zweigwhite.com

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