Bad form: RIBA standard form

The RIBA’s latest standard conditions for the appointment of architects were published a few months ago. Rachel Barnes reviewed them on these pages (13 August, page 49) and delivered a general thumbs-up. I do agree with her on one point at least. The return to the normal way of expressing obligations (“The architect shall …”) is preferable to the style of using the present tense, which featured in the previous RIBA conditions (2007). A High Court judge has recently made a similar point, though not in the context of this particular contract.

For the client, many of the problems with the previous conditions remain. For example, the architect receives additional fees if it incurs extra work or loss and expense for reasons “beyond its control”. That wording is potentially wide. The phrase “loss and expense” is new - I do hope that it does not encourage architects to make “claims”. The net contribution clause is still there, and overall liability is now explicitly limited to the architect’s professional indemnity cover.

However, the real concern that I have is the new clause relating to payment and set-off. Rachel, in fairness, accepts that this is the most controversial aspect of the conditions.

The clause is in two parts. One, which was already in the 2007 version, excludes all rights of set-off at common law or in equity. For a client, this is a significant restriction. For example, it stops the client holding back fees when the architect has been late in providing information or drawings to a contractor, and that has led to the contractor making a claim against the client. Normally, the client would be able to set its cross-claim against the architect’s fee. However, if set-off is prohibited, the client has to pay any fees that are due
and pursue its cross-claim separately.

The other part of the clause is new - and potentially far reaching. It says that the client cannot withhold any amount due under the appointment unless that amount has been agreed with the architect, or decided by a tribunal.

Now, an architect will rarely agree to a deduction against sums otherwise due. And if a tribunal has decided that the sum is not due, well, the architect can hardly complain.
There is a further problem for the client.

The conditions provide that the “amount due” to the architect is set by the architect itself when submitting an account. Since the right to withhold against this is now heavily restricted, the client may have to accept that amount as due and pay it over - and only then go to a tribunal. This would represent a severe cash flow disadvantage for a client, and would be especially galling if there were a genuine dispute about the value of any varied or extra work. It is also unduly harsh.

Looking at the clause as a whole, it is probably aimed at the type of situation where a payment is due to the architect, for example on completion of a stage, but the client is alleging that the architect’s work has been done poorly - that the drawings are inadequate or incomplete, say. In those circumstances, the clause means that the client must make the stage payment first, and raise its argument about the faulty work later.

One can see the RIBA’s thinking here. Evidently some architects have been victims of unscrupulous clients who, when the work is virtually complete, find some reason not to make the last stage payment. Wheeling out this powerful new weapon, the architect will now be able to adjudicate or sue for its fees, leaving the allegation of poor work to be dealt with at a later date.

What’s wrong with that, architects might say? The answer is that it gives the architect the whip hand in any payment dispute - and the architect is not always right. The client that is unhappy with its architect’s performance will now have an uphill struggle to argue that fees are not payable.

The RIBA form is not likely to be used by well-advised employers, or on major projects (at least, not without amendment). But less sophisticated employers asked to sign it might well do so without appreciating the risks.

This new clause should be struck through, except by a client that is actually happy to pay its architect first and argue later.

Ian Yule is a partner in Shakespeare Putsman