7
OPINION
Disagreeable agreements
Design firms need to be vigilant about clauses and language that have the potential to significantly expand their risk while undermining their insurance protection.
A s project managers, owners, and their attorneys have become more aggressive in their efforts to reengineer contractual agreements with project participants, AEC firms need to be increasingly vigilant about language being inserted and omitted in their contracts. Without careful review, they may be taking on significantly more risk while losing the critical financial protection otherwise available under their professional liability insurance policies.
Lauren Martin
In the past, the process of reviewing design contracts was fairly straightforward; owners, contractors, and design firms typically relied on the standard AIA or EJCDC documents, which have proven over time to provide fair and equitable treatment of all parties. Although under certain circumstances some revisions may have been needed, they typically were minor. These changes usually involved relatively easy to spot adjustments that rarely required the issuance of reservation of rights letters. Those contracts were negotiated among all parties involved to be fair and balanced, as well as fully insurable. Design contracts and the construction contracts associated with the projects were coordinated so that responsibilities were clear. In situations where agreements didn’t use the standard professional association documents, they
were typically brief with balanced terms that didn’t even contain indemnity clauses (as all indemnity is owed without a contract). In some cases, they were essentially simple letters of agreement. Today, however, contracts often present several potential coverage issues. By and large, the challenges inherent in these modified agreements stem from blurring of responsibilities, the misidentification of design professionals as contractors or venders, and payment provisions that allow for the withholding of payment for unadjudicated issues. BEWARE OF ELEVATED STANDARD OF CARE. The coverage issues can put designers in a difficult
See LAUREN MARTIN , page 8
THE ZWEIG LETTER FEBRUARY 10, 2025, ISSUE 1572
Made with FlippingBook flipbook maker