Read time: 3 minutes
Guide letters provide advice about matters architects should consider when composing letters to the parties involved in architectural projects.
1. When and how?
Unless the formal contract is ready to execute, a letter of acceptance can be issued to the successful tenderer to secure the contract in the interim. Refer ‘Letters of acceptance’ section in Acumen note Tenders - receiving and selecting.
1.1 Issue when the client has instructed you, preferably confirmed in writing, to accept the successful tender.
1.2 The letter should be issued as a priority upon receiving instruction from the client.
1.3 The contractor may withdraw the successful tender prior to its acceptance by the client, however, some tendering conditions may limit this right of withdrawal. In this case, refer to any Conditions of Tender that may apply.
2. Significance
2.1 A correctly worded letter of acceptance both creates and is evidence of a legal contract between the client and the contractor.
2.2 Although a correctly worded letter of acceptance could replace the formal execution of contract documents, it is strongly recommended that you organise the formal execution of contract documents as soon as possible after issuing the letter of acceptance. Refer Acumen note Building contract – execution.
3. Objective of the letter of acceptance
The letter of acceptance should identify the parties to the contract, confirm the specific offer that is being accepted (tender amount and construction period if applicable) and identify the agreed terms and conditions.
The letter of acceptance may also include requests for additional information that may be required under the tender conditions such as a construction program, list of subcontractors and insurance certificates of currency.
4. Content
4.1 Avoid duplicating information already scheduled and quantified in the tender documents, for example, by reference to 'Information to Tenderers' or 'Schedules of Tender Documents'. However, ensure that all tender documents are referred to.
4.2 Refer carefully to tender addenda, as they won't be in your 'Information to Tenderers' schedules, but nearly always include significant information on variations to the original extent of work.
4.3 Use language consistent with the general conditions of contract. For example, under ABIC contracts, the person constructing the building is referred to as the 'contractor' not the 'builder'. Thus the letter of acceptance is an opportunity for all parties to gain familiarity with the language of the contract, which guards against ambiguity.
4.4 A common cause of contractual disputes is lack of clear definition of the legal identities of the contracting parties. The architect charged with preparing the contract documents must have absolute clarity on this issue. Obtain written confirmation from your client as to the legal identity of the party that will contract with the contractor. (This should have been established well before this time, preferably when you established the very first brief). It is of utmost importance that all tenders were executed as offers to that same legal identity. The legal identity of the contractor should be evident from the tender document. If in doubt, ask and request confirmation in writing.
4.5 It can occur that inexperienced contractors believe that they are contracting with the architect. This issue is compounded if it is not immediately corrected by the architect. Such tenders must be returned and action taken to have a conforming tender resubmitted and addressed to the owner. It may be necessary to confirm the architect's role as administrator of the contract.
4.6 The following items are considered minimum for inclusion in a letter of acceptance:
- a statement that confirms acceptance by the owner of the contractor's tender, the use of the words 'accept' or 'acceptance' is highly recommended
- confirmation of the legal identity of both parties
- precise confirmation and identification of the tender offer which has been accepted; dates, tender numbers etc should be quoted
- confirmation of the general conditions of contract, and the version, date of issue etc
- identification of all tender documents by version or issue number, consistent with the principles outlined in item 4.1. Specialist consultants' tender documents must be similarly referenced
- confirmation of the architect's status as the agent for the owner.
It is important to check, confirm, clarify. Include a list of documents if necessary to be precise.
5. Action
5.1 Correctly drafting this document is important to set the groundwork for successful contract administration.
6. Are there other possibilities?
6.1 Yes, arrange to execute the complete set of contract documents. However, this generally takes more time than a letter of acceptance, and the contractor could withdraw the tender. When instructed by the client to accept a tender, do so as a priority.
7. Copies
7.1 Client/owner
7.2 Contractor
7.3 Architect's files
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.