Brian L. Lynch | Faegre Baker Daniels | January 18, 2018
With the rise in alternative project delivery systems, design professionals are often expected to provide services beyond those required under the “traditional model.”1 As one may expect, this expansion of services can also increase risk for the designer and affect legal relationships and liabilities for all contracting parties. The growing complexity of construction — coupled with designers wearing multiple hats due to changing relationships and increased scopes of work from different project delivery systems and industry practices — has had a significant effect on designer liability.
Today, design professionals can wear any one of following three “hats” during a project:
- An independent contractor in the preparation of the construction plans and specifications.
- An agent of the owner in observing the construction work as it progresses and administering the contract.
- A quasi-judicial officer with certain immunity when acting as arbiter in resolving disputes between the owner and the contractor.2
Hat No. 1: An Independent Contractor
First, during the preparation of construction plans and specifications, a designer’s legal role is that of an “independent contractor.” Under state licensure statutes and state and local building codes, the designer bears a unique responsibility as an “independent contractor” which cannot be delegated except to other licensed professionals. The principal consequence of this classification in performing design services is that a designer may be held liable for negligence to parties with whom there is no contractual privity that results in injuries to persons or property and, in some jurisdictions, in economic losses.3
Hat No. 2: An Agent of the Owner
Second, a designer may provide a vast array of services during the administration and construction phases, acting as an agent for the owner within the scope of his or her contract with the owner.4 For example, Section 4.2.1 of the new AIA Document A201-2017, General Conditions of the Contract for Construction, specifically states that “[t]he Architect will have authority to act on behalf of the Owner only to the extent provided in the Contract Documents.” Whether a designer is an agent or independent contractor during these phases can have significant implications for all contracting parties, such as whether a) the owner is bound by the designer’s actions; b) the designer may be liable to contractors and other third-parties for harm caused by their acts as an owner’s agent; and c) whether a designer can be found liable to a contractor seeking tort damages for economic loss.
Hat No. 3: An Independent Arbiter
Lastly, a designer may serve as an independent quasi-adjudicator of disputes between the owner and contractor as provided for in the contract documents. Frequently, a designer is given the authority to interpret contract documents due to its status as the party knowledgeable about design intent. For example, Section 4.2.11 of the new AIA Document A201-2017 states that it is the role of the designer to “interpret and decide matters concerning performance under, and requirements of, the Contract Documents on written request of either the Owner or Contractor.” In rendering these interpretations, Section 4.2.12 requires the designer to “endeavor to secure faithful performance by both Owner and Contractor, will not show partiality to either, and will not be liable for results of interpretations or decisions rendered in good faith.” This role, however, is fraught with potential conflicts of interest, as a designer is normally employed and paid by an owner. One of the most prevalent is when a designer is required to reexamine positions taken as the owner’s agent during the administration and construction phases. But if acting in good faith in its role as a quasi-arbitrator, designers are granted immunity from suit for their decisions.5
Because design professionals can wear any number of “hats” during a construction project — which each have an important effect on legal relationships and liabilities — it is important that all contracting parties understand which roles the design professional plays on their project.
For more on the distinct professional roles of a designer, see Bruner & O’Connor Construction Law §§ 17.4 to 17.9.
1 For an overview of the “traditional model” of project delivery, see 1 Bruner & O’Connor Construction Law §§ 2:13, 2:29 to 2:30, 6:1 to 6:4.
2 See 5 Bruner & O’Connor Construction Law §§ 17.4 to 17.9.
3 See, e.g., Eastern Steel Constructors, Inc. v. City of Salem, 549 S.E.2d 266 (W. Va. 2001) (holding architect liable to contractor for economic losses arising out of defectively prepared plans and specifications on the basis of both professional negligence and implied warranty).
4 “Possible services include: (1) advising the owner regarding contractor selection; (2) observing the work for compliance with the plans and specifications; (3) certifying contractor payment applications; (4) reviewing shop drawing submittals; (5) monitoring project scheduling; (6) certifying substantial and final completion; and (7) certifying grounds for contract termination for default.” 5 Bruner & O’Connor Construction Law § 17:6.
5 See, e.g., Wilder v. Crook, 34 So. 2d 832, 834 (Ala. 1948)