Client Architect Agreement for Limited Services (CAALS2019)

CAALS2019 Cover Letter: When using the CAALS2019 agreement form you must complete and issue to the Client a Cover Letter setting out contractual terms that are not captured in the CAALS2019 document. Because of the way that 'Cover Letter' is defined, anything included in that letter will have contractual consequences and takes precedence over anything else in the CAALS2019 contract document (see Section K). If you depart from the Institute’s template, you may inadvertently assume more onerous obligations than intended under the CAALS2019. In preparing the Cover letter, the Institute recommends against the following: making any representations about the quality and/or standard of the Services; making comments that might be untrue or misleading; discussion of the Fee or any other matter which is already covered in the CAALS form; and including anything that is vague, uncertain or immeasurable.

The CAALS was developed following extensive consultation with the Institute’s membership and stakeholder groups. While it is similar to the CAA2019 in many respects, it doesn’t contain all provisions of the CAA2019 and some other provisions and procedures differ. Like the CAA2019, it adopts user-friendly plain English and includes new provisions and clarifications on key mechanisms, such as: Cost of Works, Fees, Changes to the Services, Protracted Services, use of the intellectual property in The Design, digital files, terminating the agreement and an advance payment (Mobilisation Fee). Layout, concepts and defined terminology familiar from the CAA2019 are used.

Architects should take the time to understand and familiarise themselves with the new CAALS2019, which is published with a comprehensive User Guide, Information guide to the client and template guide letters.

You can download the contract and guides below:

Agreement documents

• 2019 Client Architect Agreement for Limited Services contract (PDF)
• Cover Letter template (Word)
• Schedule pages (Word)

The CAALS2019 can be edited digitally or printed, filled-out and amended by hand. Editable versions of the schedules and signing pages are available digitally in word format, so you can edit and print professional CAALS2019 contracts in your practice.

The CAALS also assumes you will prepare and attach a comprehensive Cover letter that captures all the other terms of your engagement and any additions to the CAALS2019 terms and conditions. A template Cover letter is provided and we strongly recommend you adopt this template. 

Once the terms are agreed with the Client, the schedule forms can be filled in and a Cover Letter prepared and provided with the Agreement to your Client for signing.

Guidance notes

• CAALS2019 User guide (PDF)
• Comparison summary between the CAA2019 and CAALS2019 (PDF)
• Information guide to the client (PDF)

The User guide is intended to give you, the Architect, guidance on the contents and effect of the 2019 Client Architect Agreement for Limited Services, suggestions on how you can complete the details in the contract’s Schedules and practical guidance on delivering your services to your Client when using the CAALS2019’s conditions.

Guide letters (optional)

• Guide letter 1 Introductory letter 
• Guide letter 2 Non-return of executed CAALS letter
• Guide letter 3 Second non-return letter 
• Guide letter 4 Non-agreement to engage cost consultant letter

The introductory guide letter is intended for use immediately after your initial meeting with a prospective client. It is intended to be a confirmation of everything discussed with the client – it assumes you will forward a draft of the agreement as an attachment to the letter.

The subsequent guide letters 2 to 3 deal with the situation where an engagement is proceeding but the formal agreement has not been signed and returned by the client, and guide letter 4 confirms that the client does not agree to the engagement of a cost consultant.

Note: A Cover Letter (such as the template provided in Agreement documents above) must accompany the CAALS2019.

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Architects Acts and Codes of Conduct

Each state and territory has its own Architects Act and architects regulations (Refer Acumen note: Architects Acts). In addition, mandatory codes of conduct have been adopted in some states that architects must comply with. The CAALS2019 has been prepared to be compliant with the various requirements and restrictions, however, all members should be familiar with the applicable Code of Conduct and the various obligations to their Client, including giving their Client a copy of the Code of Conduct (where applicable).

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Client and Architect Agreement for Limited Services 2019: Key differences

The following information outlines some of the points to be aware of when using the CAALS2019, and highlights the major differences between this agreement and the CAA2019 agreement (see also the comparison summary note above). Note that the two forms of agreement are complementary and intended to serve different purposes. The CAALS2019 may not be suitable for all projects and engagements.

This information does not deal with every aspect of the agreement and we strongly recommend that you read and understand the CAALS2019 contract and the User guide.

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CAALS and your Cover Letter

The CAALS relies on you preparing and attaching for the Client a comprehensive Cover Letter that captures all the other terms of your engagement and any modifications to the CAALS2019 terms and conditions (effectively by way of ‘special conditions’).

In Section K, the definition of Cover Letter makes it clear that the content of your Cover letter takes precedence over anything that conflicts or is inconsistent in the CAALS2019 contract conditions. A template Cover letter is provided (see above) and we strongly recommend you adopt this template, to ensure it properly links with the operative conditions of the CAALS2019 and becomes contractually effective.

If you depart from the Institute’s template, you may inadvertently assume more onerous obligations than intended under the CAALS.

In preparing the Cover letter, the Institute recommends against the following:

• making any representations about the quality and/or standard of the Services;
• making comments that might be untrue or misleading;
• discussion of the Fee or any other matter which is already covered in the CAALS; and
• including anything that is vague, uncertain or immeasurable.

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Scope of the Architect's services

The CAALS2019 adopts a similar structure and approach to setting out the scope of your service as the CAA2019 – it is laid out in a way that draws the Client’s attention to those services you will perform. Each item of the services you are to deliver is set out in the Schedule B: Scope of Services on the final page of the CAALS2019 (see also Schedule B, below).

Schedule B has 3 columns: ‘Included’ ‘Excluded’ and ‘Additional’ so that you can clearly capture and identify for your Client what services are included in the Fee you’ve agreed from the outset and which services are available at an additional cost or fee (subject to the procedure for a change to the services). This should help avoid misunderstandings and disagreements about what you have agreed to deliver, from the outset, for the Fee. Marking a service as 'Additional' is a useful way of indicating to the Client that you are prepared to offer that particular service as an extension of your engagement, but that an additional fee applies (and will require a 'Change to the Services' under the CAALS2019).

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Cost of the project

The difference between the defined terms Total Project Cost and Cost of Works is spelled out both in the User guide and the CAALS2019 at clause A.3 and the defined terms listed in Section K. This works the same way as in the CAA2019.

In the CAALS2019, the cost of building work and completed cost are a single concept so that forecasts of cost are captured in the Cost of Works. This amount is a forecast, budgeted amount that must be adjusted according to the information available up until the time of completion of the project. As in the CAA2019, the Architect is responsible for preparing the forecast and adjusted Cost of Works and its components are related to the services the Architect is to perform.

In contrast, the Total Project Cost is a budget amount which the Client is responsible for managing, and includes the Cost of Works, but also project costs which are not related to the Architect's services eg finance, landscaping, loose furnishings.

See the User guide for a more thorough explanation of these terms.

Under the CAALS2019 you are not responsible for monitoring or controlling the Total Project Cost for the Client.

It is important not to take control of matters which are outside your responsibility under the agreement as set out in Schedule B: Scope of Services. Such matters are likely to be outside your architectural expertise or not considered part of the Architect's services for which your liability is covered by professional indemnity insurance. Rather, it is preferable to make clear what is not in the Architect's range of skills and suggest the Client consults someone with the required expertise for these items.

You should explain to your Client the basis of the fee calculation you have proposed. Similarly, because under the CAALS2019 the Client is to engage all specialist consultants, you may want to guide the Client on an anticipated range of fees for those consultants. To assist you may give your client a copy of the 'Information guide to the client'.

Your Client agrees to and are bound by the budget for the Cost of Works, subject to agreed adjustments in accordance with the agreement as the project moves forward. This could be due to Client or consultant advice, tenders or offers received, or adjustments arising during construction. The CAALS2019 has been carefully drafted so that your forecasts (and revised forecasts) of the Cost of Works are not contractually binding as a guaranteed estimate and your Client needs to understand this distinction.

The Cost of Works does not include GST. This figure is the basis for calculating percentage fees under the agreement. Calculating a fee as a percentage of a GST inclusive figure may prompt allegations from the Client of double-dipping.

We strongly recommend that you clearly identify each line by ticking the respective box. However, for any line item that is unmarked or ambiguous, the provision at the top of Schedule B states that this item is by default excluded from the Services. This way, it’s at your discretion how to correct or whether to include a service in the Schedule that doesn’t have a clearly marked box—a Client can’t argue that an ambiguous line item should be considered included in the Services for the Fee.

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Time

It is advisable to promptly agree with the Client a program for delivery of the services according to the Client's own program. The CAALS2019 provides for this in clause A.4 and is of similar effect to the CAA2019.

Once a program is in place, if the Client fails to deliver information, give confirmations or put certain actions in place according to that program, which delay the Architect's services, these fall under the causes beyond the Architect's control that can trigger the protracted services provisions under clause A.5. Although there is a right to additional fees and a reasonable extension of the agreed program, there is no provision for their calculation according to a set formula. The amount of the fees and extension of time need to be negotiated between you and the Client, following the procedure set out at clause A.5.1.

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Fees

The CAALS2019 still provides flexibility for how you wish to price and calculate your fee for the services: lump-sum, percentage, hourly rates or some combination of those.

When completing Schedule A, Item 1 of the agreement, if you have negotiated percentage fees for the services under a given services heading (eg B.6 Other Services), but a lump-sum fee or hourly rates applies to one or more sub-services under the same heading – say for an additional service not specifically listed in Item 1 – you will need to make the fee basis abundantly clear to avoid misunderstandings or disputes.

Confusion could also arise where you have negotiated a combination of percentage fee and hourly rates or lump sum and hourly rates for services under any given heading (eg A.3 Planning/Development Application at hourly rates, but a sub-item on a fixed fee).

In either case, you can edit the Schedule A, Item 1 to clearly identify the relevant fee type for a given service item, or include a list or table in your Cover Letter that sets out each services item that has a unique fee method. The template Cover Letter provides a table for you to do this.

The CAALS2019 now also provides for a Mobilisation Fee in Item 1: A.0. This is provided as a fixed, lump-sum amount only. This is clearly defined as a pre-payment of your Services to be delivered. Note that some of the Codes of Conduct limit the amount of any deposit-type payment, or impose a cap relative to the overall Fee. For example, the NSW Code of Conduct limits deposit-type payments up to a cap of 10% of the 'reasonably expected or agreed total fee' – depending on whether the fee is a lump sum or a percentage of the forecast Cost of Works.

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Specialist consultants

Under the CAALS2019 the Client directly engages the consultant and must do so on the terms in clause D.1.

When the Client engages the specialist consultants, you still have a contractual right to co-ordinate them and the benefit of their deliverables.

If you are to engage a specialist consultant as a subconsultant directly or if the Client requests, then you should instead consider using the CAA2019 form of agreement which gives the project and the parties more flexibility in how they engage specialist consultants. 

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Copyright and licensing

Basically, you own the copyright and you give a license right to the Client to use the design on payment of the fees. The CAALS2019 has a reduced right to revoke the licence only if the Client has not paid your invoices. This is different from the CAA2019 and depending on the project, the Client or the engagement, the CAALS2019 may not be the suitable contract form to use.

The scenario to be wary of, is where there is a development approval and the Client intends to sell the Site with the benefit of the approval. The current law has confirmed that where nothing else limits or affects the licence arising by implication from the creation of the design, the development approval and the intellectual property in the design embodied in it go with the sale of land, despite what the agreement was between the original Client and the Architect. 

Clause E.2 gives the Client an express licence to only use the design on the Site, but does not expressly prohibit a Client transferring your design to a subsequent buyer or other third party. However, it gives you some protection via clause E.3 if you ended up in legal action over the use or misuse of your design, or if a Client has not paid your invoices. 

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Moral rights

The CAALS2019 doesn’t contain express moral rights-related obligations. Instead you will need to rely on the moral rights provisions in the Copyright Act, if you need to enforce these against the Client or third parties. 

See also guidance on Copyright and Moral rights 

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Limit of liability

Clause F contains a limit on the liability you may come to owe to your Client. This is a contractual way of allocating risk between the parties and is prudent risk management. This limitation has changed in both the CAA2019 and the CAALS2019: liability is no longer limited by a specified dollar amount or by a period of time. The limitation on liability is now the amount you recover under your professional indemnity (PI) insurance in the event of a claim, after any contribution or excess you pay to your insurer. We consider this a fairer limitation between the Architect and Client because it shouldn’t leave you out of pocket under the PI insurance policy you must have in place.

The more comprehensive information provided in the User Guide should be carefully considered as well as the information on Limitation of liability. Your Client may request that the limitation on liability be changed or deleted. We strongly recommend that you never agree to change this clause F, whether in the Cover Letter or any other way. If your Client insists, you should get legal advice.

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Insurances

In most states and territories an architect is required to carry professional indemnity insurance, and under the CAALS2019 is contractually required to do so under clause A.1.9 for an amount of cover that is not less than the amount stated in Item 4. 

However, in the CAALS2019 the Architect is not contractually required to take out any further insurances. Note that it may still be prudent or necessary to take out other insurances depending on the nature of the Services (eg public liability insurance) and requirements at law (eg Workers Compensation insurance). Please check with your broker or seek legal advice if you are not sure what insurances you are required by law to carry.

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Termination

The CAALS2019 contains a single termination right and sets out the procedure to then follow. Be aware that the termination right and procedures are very different from the CAA2019.

In all cases, a party choosing to terminate must give a notice to the other and then a 20-day notice period applies before the termination date takes effect. In the Architect's favour, the termination procedures make it clear that the Client must pay or reimburse the Architect for all Services delivered, all costs or expenses incurred, and all additional Services needed up to and including the date of the termination.

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Digital data

The CAALS2019 deals with electronically transmitted data and default digital formats (see clause E.5), but not Building Information Modelling (BIM). The ‘default’ digital file format between you and your Client is PDF and you are entitled to charge an agreed fee for converting files or providing files in a different digital format (see clause A.2.5).

If you are considering using BIM, you should consider using the CAA2019.

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Schedule A: Scheduled Items 

This schedule is set out similarly to Schedule B of the CAA2019, but note the schedules and their numbering are different to the CAALS2019. Items that are not used or referenced in the CAALS2019 have been removed: nominated Specialist Consultants, Public Liability limits of cover, form of attribution of authorship and interest on overdue amounts.

Note that the amount that is stated in Item 4: Professional Indemnity cover has the effect of specifying the minimum amount of PI cover you need to carry under the contract for that Project. If you are not sure about your insurance limits, you should contact your broker.

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Schedule B: Scope of Services 

This schedule is structured in a similar way to the CAA2019, but is provided as a bare, fully editable template schedule for you to complete as needed for the Project. You can add, edit and replace services and add new lines as needed, or you can adopt the suggested services listed in the template schedule provided with the CAA2019. We recommend that you use the template Schedule B to capture the included services and not set out the scope of services in your Cover letter—doing so could create unintended inconsistencies to the scope that you agreed to deliver for the Fee.

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