Since 1888, thus for 120
years, The American Institute
of Architects ("AIA") has
promulgated standard form documents for use in construction projects. The AIA
General Conditions document (known as the A201) has gone through 16 revisions
This latest revision of
the form documents (just released in December 2007) has altered just a few of
the numbers in the numbering system by which we all used to refer to the AIA
Here is a little table to
help you quickly find the key documents using the old numbering system compared
to the new system for the AIA form contracts:
As we will see below
in Article 15 of the 2007 documents, it is no longer necessarily true that
the initial decision-maker will be the architect.
(instead of arbitration) is offered in a "check the box" format, as was
never the case before. In Section 1.1.8 of the new AIA document A201, the
term "initial decision-maker" is defined to indicate that the decision-maker
may not be the architect.
These are two huge
changes in the long history of AIA form documents.
INFORMATION ON FINANCES THAT THE CONTRACTOR CAN PRY OUT OF THE OWNER:
It used to be, under
the 1997 version, that whenever (before and during the job), a
general contractor just requested in writing that the owner give the
contractor documents to prove that the owner had funding available to do the
work, and those documents had to be supplied to the contractor. Owners used
to alter that clause often, annoyed that they had to "stop and fetch it"
whenever the contractor "yanked the chain."
Now, under the 2007
version of the A201 General Conditions (§2.2.1), after the commencement of
the work, the contractor's right to demand proof of finances from the owner
is limited. A request can only be made if (i) the owner fails to make
payments when payments are due; (ii) there is a material increase in the
contract sum by change order, or (iii) the contractor can show, in writing,
that there is some reasonable concern that the owner is or will be unable to
make a payment.
OF CONTRACTOR DEFAULT:
It used to be under
the 1997 version that, the owner had to give a 7-day notice and then a 3-day
separate second notice to be able to have the right to jump in and perform
work that the contractor had done wrong and was not removing or correcting.
In the 2007 version, this has changed in § 2.4 to one 10-day notice
by an owner.
REGARDING THE CONTRACTOR'S OBLIGATION TO CATCH CODE NON-COMPLIANCE IN PLANS:
Sections 3.2.3 and
3.7.3 have only a few words that have been altered, but the change slightly
broadens the contractor's obligation to report any violation of ANY code
that the contractor discovers in the plans, not just a "Building Code."
New Section 3.7.5
deals at length with a problem that has interrupted projects in our Western
States, the discovery of archeological sites or "burial grounds." It also
deals with wetlands, which we rarely have here in the West. The Section
requires the owner to act promptly to avoid a discovered burial ground from
delaying the work and raises the possibility of the contractor being
entitled to an equitable adjustment, i.e., a change order for delay costs,
etc. See §3.3.1 for an added bit of text about such costs imposed on the
THE CONTRACTOR'S PROPOSED SUPERINTENDENT:
Sections 3.9.2 and
3.9.3 are changed so as to expressly require the contractor to notify the
owner and architect of the name and qualifications of the proposed job
superintendent. The owner has the right to make a reasonable and timely
objection to the proposed superintendent.
Many pieces of
Article 4 are "scissored out" and relocated. The title, which used to be
"Administration of the Contract" is revised and broadened to simply read
Section 4.2.1 appears
to shorten the time during which the architect's contract administration
duties continue so those duties no longer extend into the one-year warranty
The entire process
for making claims is moved out of this Article (Sections 4.3.1 - 4.6.6) and
is relocated to a new Article 15 (specifically, Section 15.1). As mentioned
before, the sections relocated to the new Article 15.1 no longer assume that
the architect will serve as the person initially deciding the claims related
to the project.
ARTICLES 5, 6, 7,
No changes of
significance occur. Since Article 7 is about change orders, this is a good
portion of the A201 to leave untouched. It should be noted that when CCDs
are issued, revisions to Section 7.3.9 have the architect (or "IDM")
rendering an opinion as to what portion of that CCD work that the owner
ought to be paying to the contractor while the work is being done and
while the correct amount owed for the work is being sorted out through the
CHECKS WHEN SUBS ARE UNPAID:
This article is on
"Payments and Completion" and a new Section 9.5.3 states that, if an
architect refuses to certify a contractor's Payment Application, under §
220.127.116.11 (failure of the contractor to pay subs properly), then the owner has
the option (risky though it may be) to pay subs on the job with joint
checks. If he does so, the owner has to inform the architect so that
such is reflected in the next Payment Application.
This change gives
owners a little more control when relations with a general contractor have
broken down and the owner is attempting to prevent key subs from
demobilizing and walking off the job, only to have to get them back later
THAT THE GENERAL CONTRACTOR IS TIMELY PAYING SUBS:
A new Section 9.6.4
permits an owner to make a written demand on the general contractor for
proof that the general has properly and timely paid over to the
subs sums that the owner has given to the general contractor for
subcontracted work. If the general contractor does not reply within 7
days, then the owner has the right to approach the subs directly to
ascertain their payment status.
This means that the
owner no longer has to wait an entire 30-day payment cycle (when lien
waivers have to be provided) to learn if the last payment he made did or did
not get properly paid to the subs. It gives the owner a tighter leash on a
general contractor who seems to not be paying subs, "enjoying the float,"
and thereby slowing the subcontractors' motivation to perform on the job.
In this article on
Protection of Property and Hazardous Materials, Section 10.3.5 now says that
when a contractor brings on-site a hazardous material and negligently
handles it, the contractor has to pay the owner any remediation costs or
RENEWALS OF INSURANCE CERTIFICATIONS:
Section 11.1.3 now
requires the contractor to not only deliver to the owner the initial
Certificates of Insurance, but also all renewals and all
replacements of those original certificates.
used to be that Section 11.3 in the A201 provided an option whereby the
owner could force the contractor to purchase general liability coverage for
the owner as primary coverage. This is stricken from the A201 and, instead,
Section 11.1.4 requires the contractor to name (i) the owner, and (ii) the
architect as "additional insureds" on the contractor's general liability
insurance coverage during the job AND requires the contractor to name just
the owner as an "additional insured" during the completed operations
Section 13.1 used to
say that the law of the place of the project's performance was the governing
law for the contract. However, as it is now rewritten, the following has
been added: "except that, if the parties have selected arbitration as the
method of binding dispute resolution, the FEDERAL ARBITRATION ACT (FAA)
SHALL GOVERN [as to claims handled under the new] SECTION 15.4.
This change has
potentially significant importance because a construction contract's
arbitratable disputes were handled under the old 1997 A201 by AAA
Arbitration Rules. Now, a whole body of Federal Law about arbitration
has suddenly been made applicable, IF arbitration (instead of litigation)
has been selected for dispute resolution purposes.
There is no important
change in the Termination for Cause or for Convenience sections. However, I
note that the old requirement that an owner had to prove a contract, or that
the contractor "persistently" failed to perform or follow the laws or codes,
no longer exists. Now, mere repeated violations will be enough to
allow termination to occur. It does not seem like a real change –
just a minor clarification.
In the old 1997 A201
General Conditions, there never had been any Article 15. Claims processing
requirements were included in the section on the architect's Administration
of the Contract portion of the 1997 A201 (old Section 4.3.1 - 4.6.6).
However, all of those claim-related provisions have been moved into the
new Article 15 and a wholesale revision has been made in (a) the
question of whether the initial decisions on claims will be automatically
made by the architect, AND (b) whether a disappointed party will take
that claim's initial decision to arbitration, or to litigation.
DECISION-MAKER ("IDM") ROLE:
repeats the old requirement that WRITTEN NOTICE must be given of all claims,
whether for money or for time or for consequential damages, or for other
All the way through
Article 15, reference is made to the initial Decision-maker ("IDM") who was
first mentioned in Section 1.1.8 as being a person to be selected and
identified in the contract (in the A101 or the B102, for example). BUT, IT
IS NOTED THAT THE IDM IS NOT NECESSARILY THE ARCHITECT. If no
other person is chosen as the IDM, then the architect is to serve as
THE IDM MUST STILL
RECEIVE A CLAIM 21 DAYS AFTER OCCURRENCE OF EVENT(S) GIVING RISE TO THE
CLAIM, OR 21 DAYS AFTER RECOGNITION OF THE EXISTENCE OF THE CLAIM. This very
important notice requirement remains unchanged.
ARBITRATE OR LITIGATE A CLAIM:
The rule used to be
that, within 30 days after an architect/IDM's initial decision, a
disappointed party had to challenge the decision by demanding arbitration OR
ELSE he lost his right to ever go to arbitration. (Old Section 4.4.6.)
However, the new
rule is that (under new Section 18.104.22.168) a happy party may, within 30 days
after the initial decision, demand that the other guy (the disappointed
party) file for mediation within 60 days of the initial decision. And, if
the disappointed party then fails to file for mediation within those
60 days, then the initial decision by the IDM becomes final. That
means that any chance to arbitrate or litigate is then lost by the
ARBITRATION vs. LITIGATION:
In the new 2007 B102
or A101 Contracts, the AIA has made a huge departure from the 1997 versions
and all earlier versions. For some 80 years, AIA contract forms have been
set up so that all disputes (after initial decision) simply GO TO
In the new 2007 B102
or A101 Contracts, the parties check a box whereby, after mediation, the
unresolved dispute goes to litigation OR goes to arbitration. The document
forces the parties to select either some trial judge in the courthouse, or
an arbitrator as the final decision-maker, whereas before, it used to
always be an arbitrator who was the final decision-maker.
The new AIA A201
(2007) Section 15.4.1 says that if arbitration has been selected
in the underlying contract, then an arbitration under the AIA Construction
Industry Rules will occur and ALL KNOWN CLAIMS MUST BE INCLUDED IN
THE DEMAND WHEN IT IS MADE. The FAA and Federal Law are relevant if there is
a question of whether or not a dispute is an arbitratable dispute.
CONSEQUENTIAL DAMAGES WAIVER CLARIFIED:
The new 2007 AIA
A201, Section 15.1.6 repeats the old Section 4.3.10 waiver of consequential
damages that owners don't like. But, the new section explains in detail just
which consequential damages are expressly included in the waiver. This is
really a clarification.
The new Section
waiver [of consequential damages] includes [but is not limited to]:
incurred by the owner for rental expenses, loss of use, income, profit,
financing [costs], business and reputation [losses], and for loss of
management or employee productivity or of the services of such persons;
incurred by the contractor for principal office expenses, including the
compensation of personnel stationed there, for losses of financing,
business or reputation [losses], and for loss of profit except
anticipated profit arising directly from the work.
…nothing … shall
be deemed [however] to preclude an award of liquidated damages when
applicable, in accordance with the requirements of the Contract
Documents." (Emphasis added.)
CONSOLIDATION OF ARBITRATIONS:
For nearly 60 years,
the AIA documents have contained clauses that fought against one arbitration
under an AIA contract being consolidated into some other arbitration under
the same contract. The new Section 22.214.171.124 expressly allows consolidation
if everyone consents and the arbitrations employ similar procedures
for selecting arbitrators.
Under a new 2007 AIA
A201, Section 13,7.1, there is a hard "end-stop" for the State Statutes of
Limitations, which is made applicable. No action can occur later
than 10 years after substantial completion. The State Statutes control,
but this says that no claim can be made, in any event, after then (10) years
have elapsed from final completion.