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Why being asked to sign a “subcontract” should raise a red flag

Judy LondonWhile there is nothing inherently wrong with a design professional being referred to as a “contractor” or “subcontractor,” the use of these terms may be an indication that the contract being offered is one that is more appropriate for hiring someone to build the project, rather than retaining a design professional or surveyor. Contractors have very different duties and responsibilities, and contracts used to hire contractors contain many terms and conditions that are inappropriate when securing services from a professional. Examples of such terms and conditions include:

  • words such as warrant, guarantee, and supervise;
  • responsibility for construction means and methods and job site safety;
  • liquidated damage provisions; and
  • bonding requirements.

Indemnity provisions are typically not limited to negligence, and insurance requirements often omit any reference to professional liability coverage. Agreeing to these terms and conditions could result in claims that are not covered by insurance.

A design professional’s duty is to “exercise the degree of learning and skill ordinarily possessed by a reputable design professional in the same or similar locality and under similar circumstances.” The legal system recognizes that a design professional cannot guarantee a perfect result, and professional liability insurance only provides coverage for damage caused by the design professional’s breach of a standard of reasonable care (negligence). Professional liability policies exclude coverage for claims arising out of express warranties or guarantees.

If you are handed a “subcontract” that does not include a professional standard of care and a clearly defined scope of professional services and obligates you to pay for damages other than those caused by your negligence, try to convince your client (even if that client is a contractor or design-builder) to use a contract better suited for procuring professional services. It will better protect you and your client.

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