Warranties in client and architect agreements

The architect warrants to the client that:

1. it shall perform the services with a high degree of skill, care and diligence

2. all designs and materials and methods of construction used or specified by the architect shall be suitable in all respects for their intended purposes

3. designs, materials, documents and methods of using or fixing or working proposed or specified by the architect will comply with all government and statutory ordinances, by-laws, regulations and requirements as they may apply to the project and will not infringe any patent, registered design, copyright or other protected right.

Architects are advised to avoid warranties or guarantees in conditions of engagement wherever possible for a number of reasons.

One reason is that professional indemnity insurance is unlikely to cover the additional amounts that agreeing to a warranty relating to your services poses. A warranty may require you to go over and above the standard of care ordinarily applied at law for reasonable skill and care. A typical exclusion is:

This policy does not indemnify the insured against any claim in respect of liability assumed by the insured by express warranty or guarantee unless that liability would have applied at law.

This means that the professional indemnity insurance policy will not cover liability, in the instance where that liability arises due to the express warranty you have given in a contract, which would not normally have been applied to your architectural services at law. However, the policy will cover liability that arises both under the warranty and the law, say, for negligence.

In the example given, the architect is required to perform services with a 'high' degree of skill, etc. Under the law of negligence, the usual obligation of architects is to provide services in accordance with the professional standard of care. If the architect was sued for failing to meet a ‘higher’ standard, insurance cover might be denied.

The second reason is to avoid a warranty of fitness for purpose (such as point 2 in the example above). Fitness for purpose is a term implied for the supply of goods, but not a requirement which the law applies to architects. Whether your services achieve an intended result is not the proper test of whether the services are appropriately performed. For example, there could be any number of reasons beyond your control that contribute to a particular outcome not being achieved. The proper legal test to evaluate an architect’s services is the use of reasonable professional care and skill. Although Section 61 of the Australian Consumer Law provides that services will be reasonably fit for purpose, architects and engineers are specifically exempt from this legislative requirement.

Conclusion

When confronted with a contractual warranty such as the example above, the safest option is to delete the warranty altogether. If you are not able to fully remove the warranty, you could replace ‘warrants to the client’ with ‘acknowledges and agrees’. In the case of more onerous warranties such as for fitness for purpose, you could replace it with the requirement that you use ‘reasonable steps’ so that the services are fit for the express purpose made known to you in the agreement and/or brief.